Are Severance Agreements Negotiable?
Hello, everybody! I’m Alan Crone, and welcome to this legal bulletin from Ask Alan Legal Bulletin Series. Today’s question is a really good question. We get it a lot, and that is, are severance agreements negotiable?
I’m going to say, yes, they are just like every contract you get is negotiable. Now there may not be any play. In other words, a particular situation, a company may decide that we’re going to offer you the severance package, and that’s all.
Sometimes it’s an opening negotiating position. The company is looking to make a change. They want to do what’s right they want to do what’s fair? They are going to make an offer in a severance package. They hope you take that initial offer.
They hope that whoever is being offered the package will take it, but there may be some play there. We have a lot of people come to us and have us review those severance agreements and advise them. For example, whether or not they’re releasing a valuable lawsuit or there’s compensation that they’re entitled to, maybe from a previous agreement or from some employer provided benefit, like vacation or sick days or retirement. That’s not considered in the agreement, and it just depends on your particular situation, particularly if the company is concerned about liability for the termination.
For example, the employee may be in a protected category. They might be female or African American or a certain religious persuasion or older or whatever. The fact that they’re in that protected category may mean that the company would just like to make sure that they don’t have any allegations of discrimination, harassment or retaliation. If the executive has engaged in protected activity, maybe they’ve raised some financial concerns or other illegal activity, or they’ve complained about sexual harassment. Or what have you the company may be interested in negotiating those severance payments so that it can obtain a release for all of that liability.
I would say 100 times out of 100 if the company is offering a severance package that’s not already agreed to in another document or that’s a part of a company plan, then they always want a release of all liability, and so that’s one piece of leverage. Another piece of leverage for negotiating seven agreements is longevity with the company loyalty to the company, perhaps commissions that are pending but not yet vested, that the company will benefit the company will receive by terminating the salesperson’s employment early. There are all kinds of different leverage points where there may be a negotiable component to a particular severance agreement.
So, it’s always a good idea.
If you’re presented with a severance agreement separation agreement. Sometimes they’re called termination agreements, then have a lawyer look at it and advise you on whether or not you’re leaving any money on the table. I hope this has been helpful. If it has, please share it on social media, email it to friends or colleagues, or just let other people know about this particular resource. I’m Alan Crone. Thank you. For watching. I’m going to go get some justice.
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