An Employee's Guide to Severance Agreements

If your employer has offered you a severance packagem it's important to understand what you are agreeign to before you sign. A severance agreement is a legally binding contract that generally provides an employee with compensation or other benefits in exchange for accepting certain conditions, including the waiver or release of potential legal claims against the employer.

Before accepting a severance package, employees should evaluate whether the proposed compensation and other terms are fair. They should also identify the deadline for signing, determine how the agreement could affect unemployment benefits or health insurance, and carefully review any confidentiality, non-disparagement, noncompete, or cooperation obligations.

Can you negotiate a severance agreement? It depends on the circumstances. Severance pay, benefit continuation, payment timing, restrictive covenants, references, and other provisions may be negotiable. An employee’s leverage will depend on the circumstances surrounding the termination, the language of the proposed agreement, the employee’s contractual rights, and whether potential legal claims exist.