If you work for a company and suddenly get laid off, there is a chance you may be given something known as a severance agreement. These agreements detail a number of important issues related to getting let go from your job, and can have a number of important legal and financial implications for you. But what exactly is a severance agreement, and why might it matter to you?
What is a Severance Agreement?
Put simply, a severance agreement is a type of contract between an employer and an employee, which is signed when the employee is let go from the company. Typically, these types of agreements are issued under two circumstances: when the employee has an existing contract that dictates the terms under which they can be fired, or when they are let go due to downsizing or restructuring. Either way, the agreement lays out the rights and restrictions that apply to both sides of the employment relationship.
What is in a Severance Agreement?
Obviously, a severance agreement typically lays out what the employee should receive in compensation for being fired, including any pay they may receive, as well as access to things like stock options or health insurance. It may also lay out certain restrictions, such as a non-compete clause or a non-disclosure agreement, which limit what an employee can do after they leave their job. It also typically lays out penalties if either side violates the terms of the agreement, as well as what happens if a dispute leads to litigation.
What Might You Want in a Severance Agreement?
While some people see severance agreements as primarily being for the benefit of the employer, you can also make sure they include terms that protect you. For example, you may include a mutual non-disparagement clause, which prohibits both sides from making negative statements about the other, or a mutual release that ends any ongoing legal dispute between you or your employer. Ultimately, the question of what terms to place in your contract will be dependent on your specific circumstances, and what may suit your individual interests.
What Might Happen if You Accept a Severance Agreement?
If you accept a severance agreement, you and your employer will be bound by its terms, just like any other contract. While this can be beneficial, it can also lead you to be restrained by things like non-compete agreements, which can limit your employment and advancement opportunities. A lawyer can help you review the terms of your agreement so you understand the exact consequences that it will lead to.
What Should You Do?
While an employer may lay these terms out as though they cannot be changed, the fact is that all severance agreements can be negotiated. Thus, it can be beneficial to you if you do not accept the agreement right away, and instead try to negotiate the terms. That is why you should speak to a lawyer with experience handling employment law matters, who can help you get the best possible deal for your situation.
Steven Mitchell Sack, the Employee’s Lawyer, is a New York employment lawyer with more than 44 years’ experience handling the many aspects of employment law. His new book, “Fired!: Protect Your Rights & FIGHT BACK If You’re Terminated, Laid Off, Downsized, Restructured, Forced to Resign or Quit,” is available in hardback, and contains valuable advice on dealing with employment and labor law issues. To purchase the book, feel free to contact Steven Sack at 917-371-8000 or visit the website at legalstratpub.com. To inquire about a legal matter, please feel free to contact attorney Steven Sack at 917-371-8000 or stevensackatty@hotmail.com.
