A retirement agreement is a legally binding contract between an employer and en employee which governs the retirement of the respective worker from the organization. It can also be termed as Separation Contract and is specifically documented after proper due diligence and negotiations and aims at safeguarding the rights and interests of both the organization and the employee in the event of separation of individual from the company.
A well drafted agreement caters to all the aspects of employee separation such as date and timing of the employee retirement, the various benefits which would be provided to the individual at the time of retirement and other financial terms and conditions. Apart from the employee severance benefits this agreement also caters to important aspects such as rights of the employee and organization, the employee stock options privileges, non- compete and non-disclosure clauses. An organization may also seek to indemnify itself of any negative after effects of the individual’s action during tenure of service with the organization.