A severance package (also called a severance agreement) is a contract entered into between a departing employee and his or her employer. In a typical severance agreement, the outgoing employee agrees not to sue the employer for wrongful termination or related legal claims, while the employer agrees to give the employee some form of additional compensation, often called a "severance package." Such compensation (called "consideration" in legal terms) is required in order for the departing employee's release of liability to be valid. If there is no such consideration, the employee will retain the right to sue the employer for any claims he or she may have. Below you will find key information about negotiating severance terms, what a compensation package might look like, and related resources.
Negotiating Severance Terms
Several things should be kept in mind when considering and/or negotiating a severance agreement with an employer:
The Compensation Package
There is no federal law requiring an employer to give an employee severance pay. Severance pay is a matter of agreement between an employer and an employee. The amount and type of compensation in an given severance agreement will vary according to specific circumstances, but the amount of severance pay is usually based on a number of factors, including:
Employee Benefits and Severance
Employers are not required to provide benefits to employees as part of their compensation packages, but most employers do provide benefits to their full-time employees. Some of the most common benefits provided to employees are group health insurance and pension programs. A severance agreement may contain rights to continue in a benefit program, or it may make contributions towards the benefits that the employee will be losing by leaving the employer.
Severance Pay and Benefits Considerations: Related Resources
If you have additional questions regarding severance pay and benefits, you can continue your research by clicking on the links below to learn more.
Get Legal Help Before Signing a Severance Package
Whether employees are laid off or fired, they may be able to negotiate a severance pay package, including compensation and continuation of certain employment benefits. If you're in danger of losing your job, you should speak with an experienced employee rights attorney who can negotiate a severance agreement on your behalf and ensure that your legal interests are protected.
Contact a qualified employment attorney to make sure your rights are protected.