Facing a severance package can be daunting. Whether you resigned or your employer initiated the separation, understanding the details is crucial. Here are four key aspects to consider when reviewing a severance package.
1. Severance pay and benefits
Severance pay is a primary component of any package. It often depends on your length of service and job level. Companies typically offer one to two weeks of pay for each year worked. Yet, the amount can vary widely. Beyond pay, check for continued benefits like health insurance. Some packages extend coverage under COBRA. Employers might also offer outplacement services to assist with your job search.
2. Legal rights and waivers
Signing a severance agreement usually means waiving certain legal rights. You might give up the right to sue for claims like wrongful termination or discrimination. Understand what you agree to before signing. Consider consulting an employment attorney. They can explain the legal implications and help negotiate better terms. Their expertise can provide leverage during negotiations.
3. Restrictive covenants
Severance agreements often contain restrictive covenants. Non-compete clauses can limit your ability to work in the same industry. Non-disclosure agreements require confidentiality about company information. Non-solicitation provisions restrict contacting former clients or colleagues. These terms can significantly impact your career, so review them carefully. Ensure you understand how they may affect your future employment opportunities.
4. Additional severance benefits
Employers sometimes offer extra benefits in a severance package. These may include stock options or retirement benefits. You might receive payment for unused vacation or sick days. Some packages offer training or education funding to enhance your skills. These additional perks can support your transition and improve future employability. Evaluate these benefits to determine their value to your career goals.
Reviewing a severance package requires careful consideration. Understanding the key components and legal implications is crucial. Evaluate the severance pay, benefits, and restrictive covenants. Consider seeking legal advice to protect your rights and future career prospects. Negotiating effectively can lead to a more favorable agreement, ensuring a smoother transition to your next opportunity.