Severance Packages
By: LawInfo
Published: 02/2010
There are a lot of decisions to be made quickly when your employer informs you that your job is being terminated. Many of those decisions are recorded in a formal severance package. While few employees will walk away with the tens of millions of dollars that Conan O’Brien secured when NBC decided to put Jay Leno back in the late night lineup, the legalities of individual severance packages are no less important.
A severance package is a contract between the employee and employer that details all of the terms of the employee’s termination. It is important for employees to remember that a severance package is a contract that can be negotiated and that the employee does not need to accept all of the terms initially offered by the employer without discussion. As with other types of contracts, the help of experienced counsel can greatly influence the terms of the contract.
Elements to Consider in a Severance Package
If you have been notified that your job has been terminated then you should consider all of the following elements and whether they should be included in your individual severance package. For example:
· A Statement Regarding the Reasons for Your Termination. Many employees want the severance package to read that they resigned so that they can tell future employers that they left the job of their own free will;
· Amount of compensation. If your employer will be providing you with severance pay, in addition to any money already owed to you for work completed, then the amount of the compensation should be included in the severance package. Typically, employers are not required to provide severance pay pursuant to state laws. However, they may be required to provide severance pay due to employment contracts, past practices, or of their own free will.
· Release of claims. Your employer will likely want a statement included that releases the employer from future claims regarding your termination.
· Insurance coverage. If your employer is going to continue to pay for your health insurance, or other type of insurance coverage, for any period of time after your termination then the details of that agreement should be included in your severance package.
· Unused leave time. If your employer is going to pay you for any of your unused vacation, personal, or sick leave time then the details of that agreement should also be included in the package.
· Confidentiality. If either you, or your employer, want the terms of the severance package to remain confidential then that should be included in the severance agreement. Your employer will likely require that information vital to the business remain confidential.
· Competition. Your right to work for competitors of your employer may be limited, or allowed, by a severance agreement.
No matter what is included in your severance package, make sure that the agreement is in writing and signed by you and an authorized representative of your employer. That way the elements contained in the severance package will likely be enforceable in court should a dispute arise.
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