Separation and Release Agreement: Texas

Authors: Katherine Hinde and Michelle Devlin, Littler

When to Use

An employer can use this separation and release agreement (also commonly known as a termination agreement or separation agreement with covenant not to sue) when terminating an employment relationship in Texas. Such agreements involve an exchange of consideration (i.e., something of value) between the employer and the employee. This should be something to which the employee is not already entitled under the existing employment relationship (e.g., severance pay) and in exchange for the employee providing something of value in return (e.g., a waiver of the right to pursue civil claims).

When a separation agreement is signed, a contract is created between the employer and employee, which demonstrates their intent to be bound by the terms of the agreement. However, this agreement is not to be used as a settlement of claims against the company. Unless an employer is contractually bound to provide severance, severance pay is not mandatory. Nonetheless, an employer may determine that offering severance pay is beneficial to the organization to promote goodwill or to prevent legal action.

An employer can customize this agreement to prepare a separation agreement that fits its particular circumstances.