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Understanding Severance Packages And Agreements



Many employers offer discharged workers settlements known as severance agreements. Because most employees work on an at will basis, you are probably not legally entitled to receive any compensation for your termination. However, employers usually do not offer severance agreements out of charity. If they are offering you money or continued benefits, they are hoping to gain something in exchange.

Why Your Employer Wants You To Sign

Severance agreements are most often offered when the employer is trying to prevent a lawsuit. If you believe you were fired in retaliation for filing a complaint or a worker's compensation claim, your employer may hope to prevent a retaliation lawsuit. Employers also often offer severance packages if there are allegations of discrimination. By offering a small, upfront payment, they hope to preempt costly litigation and a much larger settlement.

Know What You're Giving Up

Virtually all severance packages contain strongly worded releases. By signing, you give up any right to sue for any reason. The language of these clauses often covers injuries that have not yet been discovered. In addition, many severance packages contain non-compete clauses. These provisions may require you to promise that you will not work for a direct competitor, contact your employer's clients or work in the same geographic area.

Because these agreements are typically drafted by attorneys working for the employer, they are couched in dense legalese and heavily favor the employer. You should present the proposed agreement to an experienced employment law attorney before signing. This is the only way to ensure that you fully understand the terms.

What To Ask For

Your severance package can help you maintain your standard of living while you find your next job or help you start preparing for retirement. In exchange for the various concessions you will be required to make, an employment law attorney can help you negotiate for various benefits, including:

  • Lump sum compensation
  • Regular payments
  • Insurance
  • Compensation for unused time paid time off

Contact An Attorney

Severance agreements are intentionally dense and complex. Your employer probably does not want you to fully grasp the rights you are surrendering. An experienced employment lawyer can help you understand the agreement and fight for a better deal. Do not sign anything without consulting an attorney first.