Accepting a new job offer or losing a job may be difficult times to negotiate the terms of leaving employment. However, the separation package contained in severance agreements can dictate financial and professional futures and should contain certain terms.
A severance package includes the amount of money and other benefits that will be provided to an employee who leaves their job or has their employment ended with an employer. Except for many union workers, these packages are not legally required and are intended to compensate for the loss of employment, stop an employee from filing a lawsuit, or prevent the employee from taking other action against the employer.
Typical severance agreement specifies the amount of severance pay and the benefits being offered, how the severance pay was calculated, methodology of severance pay, an agreement not to sue, and the return of property or clearance from property. An important component in these agreements is the non-compete clause, which prevents an employer from disclosing business information and from competing against that employer for a certain time and within a specific geographic radius.
The general amount of pay and benefits are understandably an employee's major concern, especially when they are losing their job. However, important terms should be closely reviewed before accepting a severance package.
These additional terms include a justifiable reason for the job termination or layoff. Computation of pay should be closely scrutinized, too, to assure that it properly reflects an employee's length of service. Terms governing health, dental, and disability benefits need to be closely reviewed to determine whether the employer will stop paying its share of premiums on the date of separation or it will continue to pay those premiums for an extended time.
Non-compete and confidentiality clauses can restrict a career after an employee leaves a job. For this reason, its details should also be examined closely. An employee should determine the employer's direct competition and whether the length of the restriction and its geographic scope unreasonably restrict an employee from pursuing their career. A severance agreement should also clearly define "confidential information" to avoid any potential litigation.
Employees may have the ability to negotiate their severance packages, which may provide them with the financial support and post-employment services they need. Negotiating these terms can also restrict non-compete clauses, extend benefits, or even extend the use of employer resources. An attorney may be able to strengthen an employee's position in these negotiations and thereby assure that the package is fair.