A severance agreement is a contract to be signed by an employer and an employee which specifies the terms and conditions of employment termination—usually a layoff. While employers are not required to produce them, a severance agreement can be a valuable instrument for both sides in preventing a legal dispute. For the employer, it waives the right of the employee to sue, or to break confidentiality. For the employee, it grants him specific severance pay and benefits. Severance agreements are valid if they are reasonable in scope (especially regarding the employees' forfeiture of the right to sue), do not violate any laws, provide severance pay (not to be confused with wages earned prior to termination), and were not signed under duress. Severance agreements are generally not used by most companies.