Severance Agreement

Severance Agreement | Hamburg Labor and Employment Lawyers

The idea of getting fired can be scary and stressful but having a severance agreement in place can take away some of these negative feelings.

Severance Agreement: Consult an Attorney

One fairly prevalent topic in our practice over the last 8 or 10 to 12 years involves reviewing employees’ severance agreements. Many employers – and this is a good management and leadership tool for employers – present employees with severance agreements, allotting them a specified amount of prospective future pay in exchange for signing a release. Before signing such an agreement, however, an employee should have an attorney review it, or at least speak with an attorney about its terms.

Most severance agreements include language that directs the employee to speak with an attorney. I see that all the time now, because employers were getting nicked, so to speak, by not permitting people to have severance agreements reviewed by lawyers before signing them. If you are presented with a severance agreement, it’s important that you go over it with a lawyer because, in almost in every case, by signing that agreement, you’re signing away all of the rights that you would otherwise have against that employer. Whether it’s a long, detailed severance agreement or a short one that just includes a general release, by signing it, you’re waiving any and all potential claims you might have against that employer.

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Severance Agreement: Terminating an Employee Without a Severance Package

In addition to representing a lot of employees, I also represent many employers. They want to know whether they have to provide a severance package when they cut ties with an employee, and the answer is no. That is not necessary at all, and many employers offer no severance benefits.

Sometimes, we suggest that a severance policy or package makes sense, just to ensure that the ties cut with certain employees are neater and cleaner. By offering an employee a week or two of severance – or a week for every year of service – the employer gains certain protections. In order to get that money on their way out the door, departing employees waive all sorts of claims they could potentially have against the employer. In many scenarios, it makes strategic sense for an employer to give those benefits as a way of protecting themselves from exposure to lawsuits down the road.

If you would like to consult with an attorney regarding severance agreements, please call our Hamburg office to get a free confidential case evaluation.

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