When an employment relationship comes to an end, a severance agreement — often referred to as a settlement agreement in Ireland — can provide a clean and structured way for both parties to part ways amicably. These agreements typically outline the terms under which an employee will leave, including financial compensation, confidentiality clauses, and any post-employment restrictions. There is often a redundancy payment as part of the severance and more often than not, these are amicable arrangements recording an agreement that all parties are satisfied with.
Employers will seek to ensure they are properly protected by having the severance agreement witnessed by a Solicitor so that the employee cannot later claim not to understand the agreement. The employer will typically carry the cost of this as it is for their benefit that it is done.
Why Does a Severance Agreement Need to Be Witnessed?
A severance agreement is a legally binding contract between an employer and an employee, and like any contract, it needs to be executed correctly. Having the agreement witnessed helps to:
• Confirm the authenticity of signatures – A witness provides independent verification that the signatories genuinely signed the document.
• Prevent disputes – If there’s ever a question about the validity of the agreement, a witness can help confirm that it was signed willingly and under the correct conditions.
• Meet legal requirements – Some agreements include clauses that require independent legal advice for the employee, which is often acknowledged through witnessing.
• Gives the employee the opportunity to take legal advice, and to make sure that the agreement and terms are in their best interests.
Important Clauses in a Severance Agreement
A well-drafted severance agreement should include several key clauses to protect both parties and ensure clarity. Some of the most important clauses include:
• Financial Compensation – This outlines any severance pay, bonuses, redundancy payments or other financial benefits the employee will receive upon leaving.
• Confidentiality – Employers often require employees to keep details of the agreement and certain business information confidential.
• Non-Disparagement – This clause prevents both parties from making negative statements about each other after the agreement is signed.
• Waiver of Claims – The employee usually agrees not to bring any legal claims against the employer related to their employment or termination.
• Post-Employment Restrictions – These may include non-compete and non-solicitation clauses to prevent the employee from working with competitors or poaching clients or colleagues.
• Legal Advice Confirmation – The agreement typically includes confirmation that the employee has had the opportunity to seek independent legal advice before signing.
Who Can Witness a Severance Agreement?
Not just anyone can act as a witness to a severance agreement. In Ireland, the witness must be:
• Over 18 years of age
• Not a party to the agreement (i.e., not the employee or employer signing it)
• Ideally, someone neutral who has no vested interest in the terms of the agreement
• Typically, the employer requires that they are a Solicitor and to provide legal advice to the employee.
While there’s no strict legal requirement that the witness be a solicitor, having a legal professional witness the signing adds an extra layer of credibility and assurance.
Legal advice for the employee – In most cases, the employee must receive independent legal advice before signing. This step ensures they understand the agreement fully and are not signing under duress.
Keep a copy – Both parties should retain a copy of the signed and witnessed agreement for their records.
Digital Signatures and Witnessing
In today’s digital world, many agreements, including severance agreements, are signed electronically using platforms like DocuSign. While digital signatures are legally recognised in Ireland, witnessing requirements can sometimes be trickier to navigate. The safest approach is to check whether your specific agreement requires a physical signature and in-person witnessing, or if a digital witnessing process will suffice.
Final Thoughts
Severance agreements provide clarity and protection for both employers and employees, but only if they properly reflect the agreement and are in the best interests of both parties. Ensuring that the agreement is properly witnessed is a small but critical step in making sure it holds up legally.
If you’re an employer preparing a severance agreement or an employee being asked to sign one, it’s always best to seek legal advice. Our firm specialises in employment law and can guide you through the process, ensuring that your rights are fully protected. Contact us today to discuss your situation.
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