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a termination agreement is an agreement between an employer and employee it governs the rights responsibilities and benefits of the parties arising from the termination of the employee employee termination is the process by which an organization ends an individuals employment a termination agreement also referred to as a separation agreement refers to an agreement between an employer and an employee in which the employee agrees to terminate employment voluntarily the employee waives his or her right to challenge the termination or to sue the employer under all state and federal laws and union or civil service protections in return for some type of compensation or consideration by the employer usually a severance payment or some other type of monetary benefit in general an agency may want to consider a termination agreement in one of the following situations when the employee has specific rights to a hearing such as the right to a veterans preference hearing grievance arbitration or