Employment severance agreements are official break-up agreements between the employee and employer. The employer is never obligated to provide a severance payment and severance agreement. Usually, there are strategic reasons an employer decides to provide the employee a severance agreement. Those typically are because the employer wants to shield itself from legal liability and/or ensure that trade secrets or intellectual property are returned and buttoned up.  The employee, however, is not without power when it comes to severance agreements. If presented, the employee does have the ability to go back to the employer with counterpoints and arguments. 

Severance Agreements… Why Are They Important?

Severance agreements can be a helpful tool for employers and employees who wish to resolve disputes and facilitate a clean break. They help eliminate ambiguity in an employment relationship, so both parties clearly understand where they stand when the employment relationship ends. 

IF YOU’RE AN EMPLOYER…

Essentially, a severance agreement protects the employer from legal claims by the employee in exchange for something of value—typically money. A severance agreement provides for a full release of employment claims the employee could bring against the employer, but only to the extent allowed by the law. Through a severance agreement, an employer can secure an agreement from a former employee that he/she will not reapply for employment within the company, will not make derogatory remarks about the company, and will keep the terms confidential. 

IF YOU’RE THE EMPLOYEE…

A severance agreement is important to a former employee because it provides some extra monetary cushion, providing the former employee more time to find alternative employment without immediate distress from monetary worries, such as trying to pay bills. Severance agreements are also beneficial in that they allow for the employee to resign rather than be fired, and that can be advantageous when the former employee is searching for new employment. Remember, you can still renegotiate the terms of your severance agreement. 

Severance Agreements…What Now? 

Whether you’re an employer or an employee? We can handle this transaction. If you’re an employer, let’s talk about what you want to release, what you want to protect, and how you want to end your relationship. If you’re an employee, let’s talk about the balance between walking away with a monetary cushion and what you give up in terms of legal claims against your employer. 

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