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Tips to Reviewing Severance Agreements

On Behalf of | Apr 30, 2015 | Firm News |

You have just been handed a severance package or agreement, now what? You are still reeling from the termination, whether its a company wide layoff or a targeted one.  Meetings with the human resources representative in the HR conference room are never a good thing.  This means a big change in your life, even if you were expecting it and you need to proceed with caution, even if the severance payment being offered is attractive.  Here is a guide to help you through the process of analyzing your options. 1. Ask yourself why this happened?  If you believe that the company was motivated by something other than a need to reduce its workforce in the normal course of its business, then stop and take a deep breath.  You should contact an employment attorney before taking any further steps.  It is worth discussing the facts and circumstances of your termination from the company before you even think about signing the severance agreement. 2.  Look closely at the release language.  Every severance agreement, without exception, will contained a page or more of detailed language essentially requiring you to release and waive any and all claims against the company, whether known or unknown arising at any time.  This is the only basis under which the company will be prepared to pay you any money at all as it is the employer’s objective to have full and final closure on all of your claims.  If you believe that you have any claims that are being waived by signing the agreement, you should consider what the value of those claims are in comparison to what the company is paying you.  Ultimately, you have to make an economic decision as to whether it is worth it to pursue those claims or better to accept the severance payment and sign the release and waiver. 3.  Consider your existing obligations to the company.  Think back to what agreements you signed when you joined the company.  Was there a non-compete or non-solicitation agreement to which are you presently bound?  What are the ramifications of those agreements in relation to this severance agreement?  Those agreements will remain in full force and effect and may restrict your ability to find a new job in your field.  When considering the facts and circumstances of your termination and the severance package offered, you have to consider and balance what you are giving up.  This is especially important if you believe that you are being forced out of the company through no fault of your own. You will have a good instinct about what you have experienced at work and whether this termination is related to some form of discrimination or is simply a fiscal decision.   You should consider speaking with any attorney before signing any release and waiver of claims to ensure that you are making an informed decision.  Once signed and after the money has changed hands, it is highly unlikely that you will be permitted to bring a claim against the company, regardless of how strong it is.  Knowledge is power and you should always act from a position of power.