Separation from your job can lead to significant financial uncertainty. If your employer offers you a severance agreement, it might be tempting to sign that document because of the monetary support it could provide. However, accepting a severance package or an employer’s first offer is not always the best option. What should you consider before signing a severance agreement?
What should you do if asked if you want to resign with a severance package?
ASK and obtain the proposed agreement FIRST! So many agree to that path before receiving the proposed agreement and then find a pittance is offered. So, get that agreement before committing to resignation!
How does the agreement restrict your future options?
A severance agreement may offer you additional compensation, insurance coverage after your time at the company ends or assistance with your search for new employment. However, it is essential to remember that your employer offered this agreement to support the company’s interests. You should carefully consider what you are giving up in exchange for those benefits.
For example, your employer may require you to sign a non-compete agreement as part of your severance agreement. This could limit your career opportunities for some time after you and your employer part ways.
You might also give up the ability to speak openly about your time at the company as part of the severance agreement. Your employer may require you to sign a non-disclosure agreement that limits what you can say about the company, or you may waive your ability to take legal action. Depending on the situation that led to the end of your employment, this may impact your ability to report illegal activity at the company or file a claim if you experienced discrimination.
What about all those pages of legalese?
The good news is that at Cross Law Firm we can often negotiate customized enhancements to your offered severance agreement, such as outplacement, employment recommendations, extended periods of “employment” while being paid severance to enhance your re-employment opportunities, benefit revisions, customized contributions to deferred compensation or retirement plans, staggered payments or lumpsum, depending upon your financial situation, and much, much more.
Should you seek legal guidance?
If you wonder whether signing a severance agreement is the best option for you, you may want to seek legal guidance. An experienced attorney can help you review the contract, explore your legal options, and—if you decide that signing is in your best interests—negotiate the terms of the agreement to support your needs. They can also help you determine whether blowing the whistle about illegal activities or filing a discrimination or other claim based on the termination of your employment is better for you.