A growing number of savvy employers are now taking the prudent step of having departing employees sign an exit agreement provided by the company. While they are not required by law, employment exit agreements serve as a mechanism to sever an employment relationship as amicably as possible, while protecting companies from lawsuits, such as claims for wrongful dismissal. This is especially important for senior management, and people who have direct contact with customers or clients, or who know about proprietary design and production techniques.
When an employee is leaving, whether voluntarily or because they have been terminated, there are things that employers can require of the individual and things that employers are legally required to do – or prohibited from doing. These exit agreements are binding terms and conditions that protect the rights of the employer and provide the employer with legal recourse should the employee breach the terms of the exit agreement.
It is important for companies to protect business materials, designs, transaction information and ideas from being shared with outside sources. Typically exit agreements are created to ensure that company information is kept confidential. This may include limiting previous employees from sharing trade information, client lists, strategic plans, patents, IP information, coding etc.