The terms of severance agreements are usually the result of negotiations between the employee and employer. If you’re in the process of negotiating a severance contract, there are some important points you need to think about because they can have a great impact on what you walk away with.
Obviously, the money matters of the severance are important. You need to know how the severance will be earned. Typically, you’ll earn a specific number of weeks per year of service. There is likely going to be a maximum number of weeks that can be earned.
You need to have the payment method outlined in the severance agreement. Are these going to be paid on a set schedule or in one lump sum? If they are being paid on a schedule, you should ensure that the agreement stipulates that the payments will continue as stated if you pass away or become disabled. This can help to ensure that your loved ones are cared for even if something happens to you.
Find out how any bonuses will be handled if you have earned them but they aren’t paid out at the time the severance agreement becomes effective. You likely don’t want to lose out on that money that you worked hard for.
Finally, you should find out if the severance will continue to be paid if you get a new job. There are instances in which companies will stop periodic payments if the person starts working for another company.
It’s best to have the severance agreement reviewed by your attorney before you sign it. This helps to ensure that your interests are protected and the agreement is fair.