Severance agreements are sometimes part of comprehensive employment contracts. Those starting new jobs are often more concerned about their pay structure and benefits than the support available if they lose their jobs.
However, the details of a severance agreement can have a profound impact in the event of an unexpected career transition. Whether an employer drafts each severance agreement after negotiations or uses a fill-in-the-blank template, there are three key details workers may want to double-check and negotiate for their optimal protection.
1. The amount of severance provided
Severance is often offered as a lump-sum payment consisting of a specific portion of a worker’s salary. Ensuring that the amount of severance offered is enough to cover basic expenses until a worker can secure new employment is of the utmost importance. The more specialized and competitive a professional’s position is, the longer it may take to find similar employment after a sudden termination.
2. The terms for benefits
In some cases, severance packages allow for the continuation of specific benefits after a worker’s last day on the job. Health insurance and disability insurance are among the most important types of employer-sponsored insurance to validate, as paying out of pocket for coverage can be prohibitively expensive when a professional is between jobs.
3. Termination for cause clauses
Frequently, employers include terms in severance agreements that allow them to withhold severance pay if they fire a worker for a specific reason, such as performance issues. Negotiating an arrangement that allows for the reduction but not the elimination of severance in qualifying circumstances can be helpful.
Workers reviewing and negotiating severance agreements often need support. Reading through the contract with an employment law attorney can help professionals determine if a contract adequately protects them.
