The Mutual Severance Agreement is a crucial document used when an employer and employee in the Philippines mutually agree to end their employment relationship. It serves as a legally binding contract that protects both parties' interests while ensuring compliance with Philippine labor laws and regulations. This document is typically used in situations where both parties wish to document their agreement regarding the termination terms, including severance payments, benefits, and mutual releases. The agreement is particularly important in the Philippine context due to strict labor law requirements and the need to properly document separation terms to avoid future disputes. It includes comprehensive provisions covering statutory benefits, tax implications, confidentiality obligations, and property return requirements. The document should be carefully drafted to ensure it meets all legal requirements under Philippine jurisdiction while being clear and enforceable.
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1. Parties: Identification of the employer and employee, including complete legal names and addresses
2. Background: Brief history of employment relationship, reason for separation, and context for the agreement
3. Definitions: Key terms used throughout the agreement, including 'Termination Date', 'Severance Payment', and other relevant definitions
4. Termination of Employment: Formal statement of employment termination, specifying the effective date and nature of separation
5. Severance Payment: Details of the severance package, including amount, calculation basis, payment method and timing
6. Statutory Benefits: List of all mandatory benefits under Philippine law, including pro-rated 13th month pay and unused leave credits
7. Tax Treatment: Clarification of tax implications and responsibilities for all payments under the agreement
8. Release and Waiver: Mutual release of claims and liabilities between parties, subject to Philippine law requirements
9. Return of Company Property: Requirements and timeline for returning company assets, documents, and other properties
10. Confidentiality: Ongoing obligations regarding confidential information and trade secrets
11. Final Settlement: Confirmation that the agreement represents full and final settlement of all claims
12. Governing Law: Specification of Philippine law as governing law and relevant jurisdiction
13. Execution: Signature requirements and execution formalities
1. Non-Competition: Restrictions on future employment, if applicable and reasonable under Philippine law
2. Post-Employment References: Agreement on how future employment references will be handled
3. Intellectual Property Rights: Confirmation of ownership and transfer of any IP created during employment
4. Continuing Obligations: Any ongoing duties or obligations that survive employment termination
5. Medical Benefits Extension: Any continued medical coverage or benefits beyond termination
6. Cooperation in Transition: Terms for employee assistance in transitioning responsibilities
7. Legal Consultation: Acknowledgment of right to seek independent legal advice
8. Social Media: Guidelines for social media behavior and updates post-employment
1. Schedule A - Severance Calculation: Detailed breakdown of severance payment calculation including base pay, years of service, and other factors
2. Schedule B - Statutory Benefits Computation: Calculation of mandatory benefits under Philippine law
3. Schedule C - Company Property Checklist: List of company assets and properties to be returned
4. Schedule D - Tax Computation: Breakdown of tax implications and calculations for all payments
5. Schedule E - Outstanding Obligations: List of any remaining obligations or adjustments between parties
6. Appendix 1 - Resignation Letter: Copy of formal resignation letter if applicable
7. Appendix 2 - Certificate of Employment: Draft or final version of employment certificate
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