Received a Severance Package from Your Employer – Here are a Few Points to Consider


If you received a severance package from your employer, you have either recently departed from your employment or a date has been communicated as your last date of employment. There are different reasons a severance package is given (i.e. a layoff, an employee raised claims against the employer during the employee’s tenure; the employee is entitled to severance per the terms of an employment contract, in lieu of being put on a performance improvement plan, etc.). Severance is not generally required (unless the employer has a severance plan), but is offered because the employer wants the employee to sign a document that contains, among others, a release of claims, non-disparagement, confidentiality, cooperation.

Employees who receive a severance document should have the document reviewed by an attorney to ensure that the language within is the language typically found within these agreements. To find out more about what terms are generally found in a severance agreement, click here. It is recommended that the attorney reviewing your severance package be one that is well-versed in employment law so that your interests are protected.

Employees should be cognizant of the time period they have to sign the severance agreement. If the employee is over 40, the employee generally has at least 21 days to review the agreement and 7 days to revoke the agreement. If the employee does not timely sign the agreement, then the employee may be denied the severance being offered.

Employees should look at the terms of the agreement to see if what is being offered includes everything the employee may be entitled to or be seeking (i.e. health benefits, unpaid accrued wages or commissions, future payments, bonus, expenses, vacation). Remember, once the release of claims has been signed, the employee is generally precluded from bringing a claim against the employer in Court, so the employee would want to make sure everything is agreed upon prior to execution. For a list of some of the items that an employee may look to negotiate in a severance package, click here.

Employees should look to see if there is a non-compete or non-solicitation agreement in the document, or if the non-compete/ non-solicitation provisions that may have previously been agreed to, have been waived or limited. It is important to understand that non-compete/non-solicitation provisions are likely still enforceable if you have been terminated. For more information on your rights relating to a non-compete agreement, click here.

For a substantive review of your severance agreement prior to execution, to find out whether the agreement can be negotiated or enhanced and to determine your rights and obligations, contact Sheree Donath.

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