If you have a formal employment contract and get fired, or you lose your job as part of mass layoffs, you may be offered a severance agreement. Understanding the terms in this agreement can make a major difference in how things go after you lose your job. Here are seven essential terms you should look for in your severance agreement:
- Severance pay
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- One of the most basic terms to keep in mind in a severance agreement is how much you will be paid. Typically, how much you are offered is dependent on your current salary, and also includes things like payment for unused PTO or any existing back pay.
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- Continuation of benefits
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- Employers may also offer a continuation of certain job benefits after being let go from your position. Most often, this includes being allowed to remain on employer-provided healthcare plans for a certain period of time, although it may also include other benefits as well.
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- Post-employment assistance
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- In some cases, an employer may also offer assistance helping an employee find new work. This may include retraining, or assisting an employee with making contact with new prospective employers.
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- Noncompete clause
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- Often, employers will include noncompete clauses in a severance agreement to limit the ability of an employee to take advantage of their skills and knowledge. These clauses limit the ability of an employee to work in the same field or location as their soon-to-be-ex-employer for a period of time, whether that means working for a competitor or starting up their own business.
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- Non-disclosure/confidentiality agreements
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- Employees may also be asked to sign non-disclosure and confidentiality agreements as part of their broader severance agreement. These agreements prevent the employee from disclosing sensitive information about the company, as well as information related to clients or projects they may have worked on.
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- Non-disparagement clause
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- Many employers will require an employee to sign a non-disparagement clause, which limits their ability to say negative things about the employer after leaving their job. This includes preventing them from discussing legitimate complaints based on observed events or evidence, but cannot prevent them from seeking legal action for employment or labor law violations.
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- Release of claims
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- Many severance agreements will contain a release of claims, which is an agreement to not hold them responsible for any ongoing legal issues that may exist. Typically, this is done to prevent an employee from suing for issues such as discrimination, sexual harassment, wrongful termination, or other legal issues that may exist.
Steven Mitchell Sack, the Employee’s Lawyer, is a New York employment lawyer with more than 45 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.
