What You Need to Know About Severance Agreements 

Employers sometimes choose to offer severance packages to employees who are facing termination. Most employers who do this require their employees to sign a severance agreement. If you have been offered a severance package by your employer, it’s important to understand the ins and outs of severance agreements before signing. In this article, we discuss what you need to know about severance agreements.  

Common Severance Agreement Provisions

Although every severance agreement is different, there are common provisions included in most of these types of documents. Common severance agreement provisions include:

Termination

Severance agreements usually include a provision stating that the employee’s employment will terminate as of a specific date. However, it is usually advisable to have an attorney negotiate on your behalf and have the termination reclassified as a resignation, as this can improve your future employment prospects. 

Release

Most severance agreements require the employee to release his or her employer from all claims arising prior to the date of the agreement. 

Restrictive Covenants 

Many severance agreements restrict employees from soliciting the employer’s current customers or working for the employer’s competitors for a specified period. If your agreement contains these types of provisions, then you should have them reviewed by an experienced employment discrimination employment attorney to ensure that you have a complete understanding of their enforceability and impact. 

No Re-Hire 

Employers sometimes condition an employee’s severance on an agreement that the employee does not seek reinstatement or apply for a position with the organization in the future. If your severance agreement contains this type of provision, you should have an attorney review it.

Cooperation

Severance agreements also sometimes require employees to cooperate fully with the employer during the termination process. However, if your agreement contains such a provision, you should have your attorney determine whether it is reasonable or places unnecessary burdens on you during the termination process. 

Confidentiality

Finally, most severance agreements contain confidentiality provisions. Specifically, these provisions often require employees to return all company documents and maintain the confidentiality of the organization’s business information. However, your attorney may be able to negotiate exceptions on your behalf.

The Importance of Legal Review

There are two primary reasons for having an attorney review your severance agreement. The first is to ensure that you understand the agreement and the rights you are forfeiting by signing it. Severance agreements can be confusing, so it is always a good idea to have an attorney review and explain their provisions to you in plain language. The second reason to have an attorney review your severance agreement is to protect your interests. When an employer drafts a severance agreement, it is typically weighted in favor of the employer. When you hire an attorney, however, he or she can negotiate on your behalf, thereby leveling the playing field and helping to ensure that your severance agreement is fair to both parties. 

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