Severance agreements 101: All you need to know
For the unversed, a severance agreement includes everything, such as the pay and benefits offered to an employee when they leave the company under certain situations. If your employer has fired you or when you have been laid off from the job, you may have a severance agreement to deal with. The amount promised in the package could be a onetime amount or payable over a period of time. Most employees, unfortunately, do not understand whether they should sign the severance agreement, and if you are in a similar situation, you may want to seek advice. Employee survival guides can be pretty handy for understanding various aspects, or you can contact an attorney specializing in employment law.
Understanding the basics
Many companies offer severance packages, but that is not legally binding. If you are joining a new company, you may want to ask about this aspect. In typical situations, severance pay is offered to employees who are being laid off or fired. You can ask HR for the employee handbook, which should ideally have information related to severance packages.
Be careful with negotiations
You should negotiate a severance package or at least take a shot at getting a better deal. A lot depends on the kind of leverage you have, and if you don’t understand the terms and conditions or need assistance in evaluating whether the offer amount is enough, get an attorney. Many law firms have developed employee survival guides, which are quite resourceful and contain specific tips to negotiate the offer. Employers often give severance pay to avoid possible lawsuits concerning wrongful termination. If you think you have been fired from the job for reasons that are not valid, you should seek legal counsel. Also, when the offer is a direct violation of your job contract, you may have the scope to take action.
Other things to know
Severance pay is usually offered for one to two weeks for each year of work, but the amount could be higher. You should aim for at least four weeks of severance pay each year you have worked for the employer. If you are being offered a lump-sum severance payment, make sure to consider the tax implications. You should also check whether your employer will pay for health coverage until you have a new job.
Aspects concerning retirement and pension plans may vary by state and employer, and you can request a copy of these policies to discuss further with your lawyer.
