Do You Use a Template Document? If So, Make Sure It Is Working Optimally

A template document, such as for a severance agreement, can be a really good tool. When it is well-drafted, it can function as a checklist to make sure critical items are addressed, help ensure consistency in drafting, and save time. But, the best use of a template will involve customization and require you to think through standard language or provisions. To illustrate some of this, we will walk through some examples of good practices and common problems that might occur with a template severance agreement.

Start with making sure the template has good instructions for the intended audience. Instructions should address when the template should be used – is it for every separation that will have severance, do you have a separate template if someone is forty or older, or a group exit incentive is involved?

The instructions should identify which changes need approval, who can give approval, which provisions may be deleted or modified, alternate language options (such as for payment of severance in a lump sum or over a period of time), and who can answer questions. The instructions can be handled in a variety of ways, such as built into the template, a cover page, or drop-down box options.

Here are some common tips to help with better use of a severance agreement:

• Use correct dates and tense. The agreement may include an affirmation that the person has been paid all wages. This will not be correct for someone signing an agreement on the last day worked, but with a future regular pay period (in states where final wages don’t need to be paid on the date of termination). There can be similar issues with vacation or PTO.
• Determine if each provision applies for the current situation. For example, the template may have a “no rehire” or “no reinstatement” provision. It may not be needed for a RIF or location closure, especially if you want to encourage applications at another location or if future hiring is possible if needs change. And, such provisions can unnecessarily engender ill-will amongst individuals whose termination was not due to performance or behavior reasons. Similarly, a provision about the return of company property may apply to some roles or not to others.
• Check and update the internal cross-references. If your confidentiality language in section 6 refers to exceptions in section 7, but you delete section 5 (because you don’t need the “no rehire” provision), the exceptions are now in section 6. (The template can probably be set up to update these automatically. Either way, that should be part of the instructions.)
• Is the company entity correct? Are there multiple related companies? If so, should they all be covered by the release? Should they all be covered by the no rehire provision?
• Pay attention to short-hand references and pronouns. Referring to someone by their last name instead of “Employee,” may be better for someone whose employment ended several months ago. If the template has gender-specific pronouns, make sure the usage matches the individual preference, is inclusive, and is consistent throughout the document.
• Have the template or instructions point out possible exceptions. For example, the template may say it is the only agreement between the parties and takes precedence over any prior agreements (often called a “merger clause”). But if there is a separate agreement addressing confidentiality or restrictive covenants that are intended to still be in effect, it should be specifically identified and noted as an exception to the merger clause.
• Provide specific information about how to return and or revoke the agreement (if applicable). In either case, provide a deadline, form of acceptable return, and the related information. For instance, if by email, identify the person and email address.
• Identify provisions that may only be changed with approval. You may be asked to make a non-disparagement provision mutual, but applying that to the whole company is usually impractical. An instruction could alert the drafter to seek approval about who might be included, limiting duration to when those individuals are employed, and the need to alert those individuals to the restriction.

While the examples above are specific to a severance document, similar principles can help with other templates. For example, if a template for performance feedback or discipline is used too often, some phrases sound impersonal or even meaningless. If every discipline document states “further violations may result in additional discipline, up to and including termination,” the document may not clearly communicate how serious the issue is.

Offer some alternatives.

• Continuing the type of behavior described above is likely to result in termination.
• I want to make sure you understand the concerns we’ve been discussing are serious and could impact your ability to remain employed.

Whatever the purpose, some upfront thought about the template can make it a more efficient and useful tool. As always, if you have questions or would like assistance, please contact your Foley & Lardner attorney.