No employee is entitled to severance, unless he or she has an employment contract that specifically provides upon his or her termination that she or he is entitled to severance compensation. Despite this fact, it is not uncommon for employers to offer severance payments to employees who are laid off or terminated. The common motivation behind an employer offering severance compensation to a terminated employee is to obtain a waiver of claims and/or enforcement of a a non-compete agreement (or re-affirmation). Because the employer seeks something in return for the paying of severance, there sometimes is room for negotiation.
An employee should be careful in signing any severance documents in order to receive severance pay because such documents often contain expansive releases and waiver of claims and rights. Moreover, because severance agreements often contain reaffirmations of existing, or the creation of new, non-compete agreements, an employee may be precluded from seeking adequate employment upon the signing of such severance documents.
Severance agreements should be reviewed by a contract and employment lawyer with specific knowledge of severance agreements, releases, waivers and non-competes to ensure that the severance agreement contains no unfair or problematic terms.
If you have any questions, contact one of severance lawyers by calling one of our offices or using the following form.