It is no longer a world in which a person starts working at a company in his or her 20s with an expectation of working there until retirement. It is more likely nowadays for a person to have several employers throughout his or her career. However, sometimes the employment relationship ends because the employee chooses to leave and sometimes it ends because of termination or layoff.
When a worker is laid off or terminated, he or she may be owed or offered a severance package, which is basically a separation agreement to continue certain benefits beyond the job, provide severance pay or impose certain terms on the parties. It can be extremely important not to accept the terms or sign a severance offer until you have an experienced employment lawyer review it or even step in and negotiate better terms on your behalf, if possible.
Get legal advice and take time to review thoroughly
While it may be tempting to accept the agreement immediately because it promises needed severance pay, other terms of the agreement may not be in your best interest. For example, you may be asked to waive the right to sue the employer, but you may have a valid claim for wrongful termination or previous discrimination and waiving the right to sue for those wrongs may not be a good idea.
It can be important to involve a lawyer in your severance agreement whether you are an hourly worker, a salaried midlevel employee, a manager or an executive.
The earlier you involve legal counsel, the better. For example, if you have an idea you may be facing a layoff, talk to an attorney even before it happens so you can be prepared. Tell the lawyer if when you were hired you signed an employment agreement that contained promised severance terms, your employer has a severance policy that applies companywide or your employment manual contains severance terms that would apply to anyone in your position.
You may have a set time to review the terms before deciding whether to sign an agreement, but speak to a lawyer as soon as possible in any event. Today we will touch on some of the severance provisions of concern that should be discussed with your lawyer and be the subject of potential negotiation:
- You may be offered money, either a set amount or a certain number of months of continuing salary, for example. Your lawyer may advise you to negotiate for more.
- You may be owed unpaid but earned vacation time.
- You may need unemployment benefits, but may be asked to waive the right to claim them.
- You may need continued health insurance because of a medical crisis or long-term condition in you or a family member. While you probably have a right to purchase continued health coverage under COBRA, those premiums are usually expensive, almost prohibitively so for some. You may be able to negotiate continuation on the company policy for a set time.
- You may be asked to accept a noncompete agreement, which means that you are asked not to work for a competitor. Before you agree, your lawyer should review the terms of a noncompetition clause to be sure it contains legal restrictions as to the geographical scope, length of time and other restrictive terms. You may need as much ability to compete with your former employer as possible in a new position.
- You may be asked to agree to a nonsolicitation clause, meaning that you agree for a certain period of time not to solicit the same clients or customers that your current employer serves. Your counsel should review such a provision to be sure it is reasonable and enforceable in its geographical scope and length of time.
- You may ask to keep company equipment like a cell phone or laptop.
- If you are an executive, there may be perks or investments that need careful negotiation.
- And more
Seek the advice of an attorney with specific severance package negotiation experience if you are faced with termination from your job.