Employment exit agreements are generally used when an employee with sensitive knowledge leaves a company (be it voluntary or involuntary). The agreements are primarily designed to protect the employer and provide them with legal recourse should the former employee violate the agreement. Additionally, the agreement outlines what information the employee can use outside of the company.
Return of Property
An exit agreement commonly stipulates that the employee return all company property to the employer. Copies of company property, such as keys, tools, electronics, company cell phones, reports or other documents also are typically requested by the company as part of the agreement.
If applicable, many companies request that the employee keep confidential any information regarding research and development of new products or procedures of the employer. This includes any proprietary information; for instance, if a company produces a product with a “secret recipe” the former employee could be held liable for disclosing its contents.
Agreement to Non-Compete
Employees often must agree not to compete with their former employer in the open marketplace. These clauses are common in exit agreements of employee leaving popular restaurants or service companies and are usually time specific. For instance, an employee leaving a successful restaurant that features a trademark dish, may be required to agree not to set up their own similarly themed business for at least five years.
Read More: Employee Housing Agreement
Employment exit agreements legally oblige the employee to the terms of the agreement. The agreements are legally binding contracts enforceable in a court of law. Employment exit agreements protect the intellectual property of the employer.
Exit agreements are typically signed during an exit interview conducted just prior to the employee leaving for the last time. Therefore it is common to include the exit checklist as part of the agreement. The checklist is simply a series of steps required of the employer and the employee such as canceling passwords, return of company property and any other particulars.