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What is a severance agreement?

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If you are laid off or terminated by your employer, it may offer you a severance package in order to avoid the possibility of being sued for wrongful termination. These agreements are most commonly used when an employee is a protected individual or when the risk of litigation is great enough that the expense of the agreement is worth it.

According to Forbes, a severance agreement usually contains many of the same provisions, including the severance payment. However, if this provision is taken care of in your employment agreement, which you signed when you were hired, it is not necessary to include it again in your severance agreement in order to get the money you were promised. However, it may be in your best interest to accept a severance amount that is greater than what you already agreed to.

Benefits are also commonly a staple of these agreements. If you are offered a severance agreement, it should outline which, if any, of your employee benefits will carry on and for what period of time. This provision usually includes health insurance and how long COBRA benefits will last. Another type of benefit is money owed to you by your employer. This usually takes the form of expenses that need to be reimbursed, or unused vacation time.

Other provisions included in the agreement are in place more for the benefit of your employer. This can include a release of claims preventing you from taking any legal action for the termination, non-compete agreements, and clauses that state you are prohibited from making disparaging remarks or references about your former employer. Provisions prohibiting you from disclosing any proprietary information are usually standard as well.

Ultimately, severance agreements can contain anything that an employer wants it to contain. However, you do have the right to negotiate the terms contained therein. This should not be considered as legal advice, as it is meant for educational purposes only.