Offered a Severance Agreement? Read This Before Signing It!

posted in: Employment Law | 0

In speaking with clients, I’ve found that people have different ideas about what a “severance” is – some think employees are entitled to a package, and others think that the company is offering a severance out of goodwill.

A severance package is just a payment made by the company to a departing employee in exchange for the ex-employee’s promise not to sue them at any time in the future.  It is nothing more, and nothing less.  The company isn’t obligated to provide a severance, and many don’t.  They are simply buying a “release of claims” from you.

There are good and bad severance packages – sometimes an employee is offered two weeks, sometimes up to one year.  Two months is about average.  Employers generally have a policy that awards a certain number of weeks of severance based on how long the employee worked there.  Other factors at play are the amount of money the employee made, the financial strength/size of the company, and sometimes a calculated decision about the odds that the departed employee will sue.

It is worth running the circumstances of your termination by me before signing a severance, because I can advise you as to whether you have a good case that is worth significantly more than the offer, or not.  I can also look at the agreement to see if there are any non-standard clauses inserted that are not in your best interest.  Also, if you are an executive or highly compensated person, the agreements are typically negotiable, and the difference in recovery between having an attorney handle the negotiation versus doing it yourself can be significant.

43132862 - boss gives employee dismissal contract to sign


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