I your employer ends your time with the company—whether because of termination or layoff—they may offer you a severance package. Even if this package seems fair, you might wonder whether the agreement is really fair to you. What should you know before accepting a severance agreement?
What do your employee handbook, your contract and the law say?
Your employment contract or handbook may include terms that must be fulfilled in the severance agreement. If your company has a policy in place about severance packages, it is essential to review that policy to ensure that you are treated fairly.
It is also important to keep the law in mind when reviewing your severance agreement. As the Wall Street Journal notes, some companies may offer a severance package in an attempt to avoid legal action if you were wrongfully terminated. If you believe that your company ended your employment because of discrimination or retaliation, a severance package might not be in your best interest.
What terms does the agreement include?
Severance agreements can include a wide variety of details. These may include:
- Waiving the right to take legal action against the company
- Waiving the right to unemployment benefits
- Clauses that prevent you from speaking negatively about the company
- A noncompete agreement
- A nonsolicitation clause
If you believe that these terms are unfair, you may want to negotiate with your employer to establish terms that better reflect your needs.
How does the agreement address pay and benefits?
Generally, a severance agreement includes severance pay and other benefits. You may be offered a certain amount of money, payment based on unused vacation time and even continued health insurance coverage. Your financial health after the end of your employment may depend on carefully reviewing and potentially negotiating these details.
When these questions arise, you may want to seek legal advice. An attorney can help review the terms of your agreement and ensure that you receive fair treatment.