Reasons to Reconsider Accepting a Severance Package from Your Employer

Feb 13, 2024
By admin
Reasons to Reconsider Accepting a Severance Package from Your Employer

A severance package is a contract that extends certain benefits to an employee upon separation of employment. A severance package may be offered following termination (either due to layoffs or due to a merger or acquisition). It may even be included as a provision in an employment contract when you start in a new position.

And while severance packages are not required by law, many employers do offer them. They typically outline important details like the amount of severance pay being offered, what kind of continuing benefits you may receive, and employment placement assistance. Severance packages are intended to help ease the transition out of your terminated position.

But while a severance package offer can be a great benefit, it can be important to give any offer careful consideration before accepting it because it is a contract between you and the company. It is vital to ensure you have a full understanding of all provisions of the severance package. Below, we take a closer look at some of the reasons to reconsider accepting a severance package from your employer before consulting an attorney.

Reasons to Reconsider Accepting a Severance Package from Your Employer

While a severance package may be offered by your employer in a positive nature, there are still a number of reasons why you may want to reconsider accepting a severance package from your employer as soon as one is offered.

  1. Consider why you were terminated. If you have reason to believe that you were terminated wrongfully (i.e., based on a protected characteristic like race, gender, or religious beliefs, in retaliation for protected activity, etc.), you may not want to accept a severance offer right away. Some severance packages require employees to waive certain rights, such as waiving their right to file a discrimination or wrongful termination claim.
  2. Is a non-compete agreement included in the severance package? Depending on the industry you work in, some employers may include a non-compete in a severance package in order to prevent employees from working with their competitors. This may impact your ability to find work in the future.
  3. Look at the provisions included in the severance package and look over your employer’s severance package guidelines, should they have any. While employers aren’t required by law to provide a severance package, they may have their own guidelines in place that can help give you a better idea of what is typically included. This may be found in company guidelines or in the employee handbook.

You should take time to carefully consider any legal document before you sign it. Severance packages are binding, legal documents entering you into an agreement between you and your former employer. Although severance agreements can be beneficial as you transition out of a role, you should fully understand what rights you may be giving up should you accept the offer.

How Do You Respond to a Severance Letter?

Should you receive a severance letter, take time to read through the letter and the severance package offer fully. You do not need to sign right away.

Following the arrival of a severance letter, we recommend consulting with a severance negotiation and agreements lawyer.  Even if you are not being asked to waive away certain rights such as the right to file a discrimination claim, it doesn’t hurt to have a lawyer look over a severance offer. They can provide legal advice and insight into each of the offered provisions included and how to respond to the severance letter.

Should You Try and Negotiate Severance?

We recommend negotiating a severance agreement when possible, especially given that they are binding, legal documents. They are enforceable by law and contain important details about severance pay and additional benefits that you will receive should you accept the package. They may also contain limitations on your conduct and future employment (such as a non-disparagement clause, non-compete agreement, non-solicitation agreement, etc.).

Severance packages can typically be negotiated at the end of your employment or at the beginning of new employment, which is often considered to be the best time to negotiate. Negotiating provides you with time to fully understand exactly what you are signing and gives you and your lawyer an opportunity to ensure that the agreement is beneficial to you.

Further Questions? Contact Our Employment and Labor Law Firm Today

Severance packages can raise a lot of questions, especially given the number of details included. When you are offered a severance package, it can be beneficial to consider all of your options and how each provision within a package may impact you in the long term – including your ability to find new work, continued benefits, and the amount of severance pay included in the package.

And while not every employer may be open to negotiating on a severance package they have offered you, you still have the right to read over the offer carefully before accepting or declining the offer. We recommend consulting with a severance agreement lawyer before signing, especially if you are interested in trying to negotiate any terms of the severance package.

At The Friedmann Firm, our Ohio employment lawyers are here to help. Since our founding in 2012, our team of experienced attorneys has been working with clients on all manner of employment law including discrimination cases, wage and hour violations, and severance package negotiations.

Please contact us over the phone at 614-610-9755 or by reaching out online to schedule a free and confidential consultation.