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Why severance agreements are more complex than most employees realize

There is a natural tendency to assume that whenever the topic of a severance agreement is broached in connection with the impending departure of an executive- or management-level employee, matters will invariably turn contentious.

While it's true that higher-level employees and their employers often part ways on less than amicable terms, it's also equally true that the two sides are frequently willing and able to engage in productive discussions.   

Regardless of where things stand, however, it's imperative that soon-to-be former employees do everything in their power to protect their best interests.

To that end, it is wise for executives to consider retaining the services of an employment law specialist to assist in negotiations and with review and revision of the severance agreement.

In the event of any doubts, consider just how complex the average severance agreement can be. Indeed, many will include the following provisions, which absent the necessary review, will more than likely be drafted in favor of the company, not the departing employee.

  • Severance payment provisions: If company policy or a previously executed employment contract dictates that the employee is entitled to a certain amount upon separation, there may be no need to execute a severance agreement whereby an employee releases claims or gives up other consideration in exchange for the severance payment. An employment law specialist can assist the employee in determining whether he or she is being asked to give up more than is required for something to which he or she may be already entitled.
  • Non-disparagement provisions: For many employers, it's standard operating procedure for severance agreements to include non-disparagement clauses prohibiting the ex-employee from making disparaging remarks regarding the company. A legal professional can not only work to moderate such a provision, but to also include a provision dictating how references for future employers of the departing employee will be handled.
  • Benefits and money owed: A legal professional can help ensure that all benefits to which the employee is entitled are set forth in clear and concise terms, including health care coverage and COBRA rights. Similarly, they can help ensure the agreement addresses payment terms for things like unused vacation or expenses that have yet to be reimbursed.

We'll continue this discussion in future posts, exploring releases of claims and restrictive covenants, among other key provisions.

In the meantime, consider speaking with a skilled legal professional if you have questions or concerns relating to the execution of a severance agreement.          

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