Employers will offer seemingly great benefits to incentivize employees to sign a severance agreement: compensation, insurance, and career counseling are among the most common. In addition, the severance agreement frequently contains clauses preventing a former employee from discussing specifics regarding the company you are leaving.
It is reasonable to exercise caution when deciding whether to sign a severance agreement. Ultimately, non-compete agreements are designed to protect the employer’s interests primarily and the employee’s interests collaterally. This is particularly true when an employer is not required to provide you with a severance payment in the first place.
Many people find it intimidating to negotiate severance compensation, but every employee should, at the very least, know how to negotiate it if the time comes. Not being prepared for the severance conversation could cost you thousands in compensation. When going into these negotiations, remember that you are signing away some of your rights, so don’t sell yourself short. The good news is that you won’t have to decide on the spot when you’re presented with a severance package. Employees typically have at least 21 days to consider the severance package before deciding.
Think of the agreement from the employer’s perspective
The method used to determine severance pay is important to know. Some businesses compute severance pay using a predetermined formula: the number of years you have worked for the company, your position, the size of the organization, and whether severance pay was included in your employment contract are some fundamental considerations employers look at. In addition, comparing your company to other similarly-situated organizations regarding severance packages has become easier than ever with the advent of internet resources for employees. Furthermore, the conversation around workplace fairness and employee treatment (and public fallout from a lack thereof) may cause an employer to be more mindful regarding how they measure up to the competition.
Severance compensation includes more than just money
Other common severance agreement incentives include unused sick or personal days, career counseling, bonuses, life insurance, and health insurance. There’s no hard-and-fast rule on what you can and cannot include in a severance package, so you can tailor it to fit your unique career position. For example, if you’d be placed in a severely disadvantaged position if you returned office equipment, consider asking to keep the business cell phone, laptop, printer, desk, etc. If you’ve been relying on your employer to pay for that expensive gym membership, include this concern in your list of demands.
You can even bring other employment agreements into the conversation. For example, if you feel constricted because you signed a non-compete agreement, part of your severance package could be a release from the non-compete. Your attorney can assess the severance package your employer is offering and assist you in negotiating a fair package that is tailored to your unique needs.
Is what you’re giving up worth the incentives?
Most employers won’t offer you severance pay unless you agree to waive your legal claims beforehand. Therefore, before signing a severance agreement, you must discuss your legal options with an experienced employment law attorney. For example, a non-compete clause may forbid you from working in your sector for a certain amount of time, and a non-disclosure may ban you from publicly discussing your experience with the company. Signing these rights away leaves you in a less-than-ideal scenario when searching for a new job.
Finally, never sign a severance agreement if your employer has done something unlawful (discrimination, sexual harassment, retaliation, etc.). If this is the case, you should speak with a lawyer and sign a settlement agreement instead.
Contact Our Employment Law Attorneys Today
If you’re in Memphis, TN; St. Louis, MO, or surrounding areas (including Germantown, TN, Collierville, TN and Clayton, MO) and wonder whether your employer’s proposed severance package is fair, we have the answers you need. We will help you interpret, negotiate, and pursue claims under employment agreements and severance agreements. Call us today at 901-737-7740 or contact us online to pursue your benefits and protect your rights.