What is in a Severance Agreement?
A severance package is pay and benefits employees receive when they mutually agree to leave their employer. Severance agreements are more than just a “thank you” payment from an employer. Companies aren’t required to offer severance pay, but those that do will have different sets of policies and guidelines for how severance is handled. Policies for severance packages are often found in a company’s employee handbook, and in many countries, they are subject to strict government regulation. Severance packages often stipulate that employees will not sue the employer for wrongful dismissal or attempt to collect on unemployment benefits, and that if they do so, they must return the severance money.
What’s included in a severance package varies per employee. In addition to their remaining regular pay, a severance package may include some of the following: payment for unused accrued PTO vacation time Holiday pay or sick leave, payment in lieu of a required notice period, medical, dental or life insurance, retirement accounts (such as 401(k)) or 403(b) benefits, stock options, and assistance in searching for new work, such as access to employment services or help in producing a résumé.
An employment attorney should be contacted to assist in the evaluation and review of a severance package.