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A Severance Agreement spells out the final terms when an employer and employee part ways in Malaysia. It's a binding contract that details the compensation package, benefits, and conditions that come with ending the employment relationship - usually including a lump sum payment beyond the standard termination benefits under the Employment Act 1955.

Most Malaysian companies use these agreements to ensure a clean break and prevent future disputes. The agreement typically includes confidentiality clauses, non-compete restrictions, and releases from legal claims. It protects both sides by clearly stating what each party gets and gives up, while making sure everything follows Malaysian labor laws and regulations.

Consider using a Severance Agreement when ending employment relationships on mutually agreeable terms in Malaysia, especially for senior executives or during company restructuring. These agreements prove invaluable during sensitive departures, voluntary resignations with enhanced benefits, or when implementing redundancy programs.

The agreement becomes essential when you need to protect company secrets, prevent potential litigation, or ensure compliance with Malaysian labor laws. Key moments include situations involving trade secrets, customer relationships, or when offering payments beyond the minimum legal requirements. It's particularly useful during mergers, acquisitions, or when managing group terminations where consistent treatment matters.

• Employee Severance Agreement: Standard version covering basic termination terms and compensation
• Severance Pay Contract: Focuses specifically on payment terms and schedule
• Confidentiality And Non Disparagement Agreement: Emphasizes protecting company information and reputation
• Retention Bonus And Severance Agreement: Combines exit terms with incentives to stay during transitions
• Non Disparage Agreement: Specialized version focusing on maintaining professional conduct post-employment

• Employers/Companies: Draft and offer Severance Agreements through their HR departments or legal teams, especially during restructuring or strategic exits
• Departing Employees: Review and negotiate terms, particularly senior executives or those with access to sensitive information
• Legal Counsel: Draft, review, and ensure compliance with Malaysian employment laws and Industrial Relations Act
• HR Directors: Manage the process, coordinate between parties, and maintain documentation
• Trade Unions: May negotiate terms for collective severance arrangements during large-scale restructuring
• External Consultants: Advise on market-standard terms and tax implications of severance packages

• Employment Details: Gather full employee information, position, hire date, and current compensation package
• Severance Terms: Calculate total payment amount, including salary, benefits, bonuses, and any pro-rated entitlements
• Legal Requirements: Review Malaysian Employment Act provisions for minimum benefits and notice periods
• Company Policies: Check internal severance policies and past precedents to ensure consistency
• Protection Needs: List confidential information, trade secrets, and customer relationships requiring safeguards
• Document Generation: Use our platform to create a legally-sound agreement that includes all mandatory elements
• Final Review: Verify all terms, dates, and amounts before presenting to employee

• Identifying Information: Full names, positions, and details of both employer and employee
• Payment Terms: Detailed breakdown of severance amount, timing, and method of payment
• Statutory Compliance: References to Malaysian Employment Act requirements and minimum benefits
• Release Clause: Clear waiver of legal claims under Malaysian employment and industrial relations laws
• Confidentiality Terms: Specific obligations regarding company information protection
• Non-Competition: Reasonable restrictions following Malaysian contract law principles
• Return of Property: List of company assets to be returned
• Execution Block: Proper signature sections with witness requirements

A Severance Agreement differs significantly from a Business Acquisition Agreement in Malaysian law, though both often come into play during corporate transitions. While severance deals with individual employment endings, business acquisition agreements handle the complete transfer of business ownership and assets.

• Scope and Purpose: Severance Agreements focus on terminating employment relationships and settling related obligations, while Business Acquisition Agreements cover entire business transfers, including assets, liabilities, and operations
• Parties Involved: Severance deals with employer-employee relationships; acquisition agreements involve business entities, shareholders, and stakeholders
• Legal Framework: Severance follows Malaysian employment law and the Industrial Relations Act; acquisitions fall under corporate law and Companies Act regulations
• Duration and Effect: Severance typically represents a one-time settlement, while acquisition agreements create ongoing obligations and relationships