Options When You Are Offered a Severance Agreement

You’re leaving your job, and you’ve been offered a severance agreement—but should you take it? How do you even decide?

Whatever got you to this place, we’re sorry that you’re going through the difficult process of finding and transitioning to new employment. But before you cut ties with your old job, it is important that you fully understand your severance agreement. This blog post explains the three main choices you have after your company offers you a severance agreement.

Accept It

First, you could sign the agreement, accept your employer’s terms, and enjoy the benefits of that agreement while you look for a new position. This could be great for you! If the severance package has everything you are looking for, it can provide you with a great safety net while you transition into another position, and it will probably preserve your relationship with your employer.

However, almost all severance agreements come with lots of conditions. You’ll want to carefully read and understand all of them before agreeing to them. If you sign the agreement, you may be signing away some of your rights. This is what the company gets from the agreement in exchange for your continued compensation and/or benefits.

One very common term, found in almost all severance agreements, is what is often called a general or mutual release of claims. If you sign a severance with a general release of claims, you will no longer be able to sue your former employer for violations of your rights that may have occurred while you were an employee or when you were terminated. If you believe you were wrongfully terminated or that your rights were violated while you were working for your former employer, agreeing to a severance agreement that contains a mutual release of claims prevents you from suing your former employer in a court of law to recover any monetary damages or other losses.

There are other very important terms (such as a nondisparagement clause) that can have a major impact on your career and next steps. Remember that if you sign the agreement, you are signing away these rights. Carefully weigh the benefits of your severance agreement against what you are giving up by signing.

Reject It

Second, you could reject the agreement in its entirety. This preserves all your rights, and might be worthwhile if you have a strong claim against your former employer. Unfortunately, it leaves you without the safety net of the offered agreement’s benefits.

Try to Negotiate for Better Terms

Third, you could attempt to negotiate a better severance agreement. This is best done with the help of an attorney. This choice usually does not prevent you from either accepting or rejecting the offer if negotiating for a better offer doesn’t work out.

If your former employer has already made you an offer, that demonstrates that the company values avoiding a lawsuit or other complications stemming from your termination. The question then becomes, is the first offer the company makes the best offer that it is willing to make? If you have some legal leverage and the employer is willing to negotiate, help from a qualified attorney can often increase the amount that the company offers and/or improve the terms of your severance agreement so that you have more options going forward.

Summing It Up

A severance offer is a good thing. It means that even in a bad situation you still have options.

If you believe that you suffered from illegal behavior while you were working for your former employer or that your termination was the result of discrimination or retaliation, was in violation of your contract, or was illegal for some other reason, then a severance offer represents a decision point. Agreeing to it waives your rights, declining it costs you the benefits of the agreement, and attempting to negotiate it without an attorney is difficult at best.

Are you unsure about what you should do in response to your severance agreement offer? Please contact our office. We’d be glad to help you evaluate your options.