Keeping the best talents in a rather competitive business world is very challenging. It requires managers to employ the necessary strategies to retain their employees. One way of holding employees is through entering an employee retention agreement, which says that the employee remains in the company for a specified period. What are the components of the template? How should an employee retention agreement template look like? Let’s find out together.

Employee retention agreeement sample

[Company’s Letterhead]

[Date]

[Name of the employee]

[Address]

Re: Employee Retention Agreement

Dear,

This employee retention agreement is related to your position as [Title] at [Name of the company]. Due to the company’s need to ensure its continuity now and in the future, if any change occurs (as outlined below) together with any other change of control that the company may propose, you and the company are hereby entering into the following agreements:

Severance payments and benefits

If a change of control as outlined below happens after the date of the agreement, you remain to be an employee of the company, and this includes any other time within twelve months after change of control, if your employment is terminated by the organization without a cause or by you due to a good reason.

  • Severance payment

After the termination of your employment (termination date), the company will pay you , the severance payment (the sum of the payment), equivalent to 100% of your annual basic payment as well as the annual incentive pay, as long as you have not received any other severance payments under other policy, program or plan or arrangement of the organization.

  • Employee benefits

The company shall continue to offer you employee benefits for a year following the date of termination. However, the amount might reduce if you have received such benefits from another employer within that period of one year.

  • Payment reductions

The company will only deduct reductions from your payment as required in case of overpayment and other financial misfits

Stock options and restricted stock

Where a change in control occurs, you remain to be an employee of the company

2.1 Acceleration

If during the 12 months after the change in control, your employment is terminated by the company without cause or by you with good reason, your unvested restricted stock will vest and the stock options you will have by that time will accelerate.

  1. No mitigation

You will not be expected to find employment or remedy the severance payment agreement under this employee retention agreement. The severance payment shall also not be decreased by any compensation you might attain from another employer after the termination date.

  1. Rights for employees

None of the clauses in this agreement restricts from terminating your employment with the company either before or after the change of control.

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