When a person is terminated from their employment, almost always the employer will require as part of any severance agreement a release of liability. Signing a release from a former employer can have significant legal implications. It is important to understand the terms of any agreement and to be aware of the legal consequences of executing such an agreement before signing one.
A severance agreement, in its simplest terms, is a contract between the employer and a former employee that outlines the terms of separation. The employer almost always agrees to pay the former employee a certain amount in exchange for the former employee giving up their right to pursue legal claims against the employer. These claims could include wage discrepancies, discrimination claims, or workman’s compensation issues to name a few. Usually, the severance agreement broadly encompasses all possible claims. Thus, it is important to evaluate the value of any legal claims you may have against your employer before signing a severance agreement.
When reviewing a severance agreement, an employee should carefully review the document so the employee is aware of exactly what rights he or she is giving up based on the terms of the release contained in the agreement. Additionally, during this review, the employee should ensure that the severance package includes all of the benefits and compensation that the employer promised.
Because the language of legal documents can often be difficult to understand, it can be advantageous to have a trained professional review such documents before you decide whether to sign them. While doing so does incur additional cost, that additional cost will help you mitigate potential risk. Hiring an attorney to review a severance agreement can offer many advantages. Here are some examples:
- Understanding your rights. A severance agreement is a legal contract and can include many complex provisions. An experienced attorney can help you understand and evaluate the agreement, ensuring you are aware of all your rights and obligations.
- Negotiating better terms. Your attorney can help you negotiate better terms, such as additional severance pay or enhanced benefits. In some cases, your attorney may even be able to negotiate to have certain portions of the agreement removed or modified.
- Protecting your interests. An attorney can help protect your interests by making sure all terms are fair and you are not being taken advantage of. Your attorney will be able to review the agreement for language that could potentially be harmful to you.
- Avoiding future litigation. An attorney can help ensure the terms of the agreement are sufficient to protect both parties and avoid any potential legal issues down the line.
While most individuals do not have significant legal claims at the termination of employment, and a severance agreement is usually just a formality, there are cases where a severance agreement can cause individuals to give up significant legal remedies. Thus, if a person has a severance agreement staring them in the face and he or she thinks they may have some legal claims against his or her employer, it could very well be worth it to have such agreements reviewed.