When your employment ends unexpectedly, it can be stressful and confusing. Your employer may offer you a severance package and ask you to sign a severance agreement quickly. Before you sign anything, it is important to understand what you are agreeing to.
There are a few key things to review before you sign that severance agreement.
Review the pay details
Make sure that the severance pay details appear clearly and in detail. It should list the amount as well as the manner of payment, such as lump sum or in a payment schedule. If the amount seems unfair, take the opportunity to negotiate before you sign it.
Check the release language
In most severance agreements, you release any claims against your employer when you sign the contract. Read the release language carefully to ensure that you understand what you are releasing. Any overly broad language that exceeds employment-related claims is cause for concern.
Consider any post-employment restrictions
Many severance agreements include restrictions about what you can do after termination. Sometimes, these agreements include things such as non-compete agreements, non-solicitation and non-disparagement clauses. Consider how these terms will limit your future options and negotiate if necessary before you sign.
Despite the fact that employers have no federal obligation to offer severance pages, 64% of surveyed employers extend some form of severance when terminating employees. Those contracts can vary widely, so you should always review each element of the severance agreement thoroughly before you sign it. Remember that you have the right to negotiate as well, so advocate for fair compensation.