Before You Sign: What to Look for in a Severance Agreement

If you have received a severance agreement from your employer, there are several important factors you will want to consider before you sign. While there can be benefits to accepting a severance agreement (typically in the form of financial compensation and continuing access to healthcare coverage or other benefits for a period of time), there can be drawbacks to signing as well.

5 Key Factors to Consider Before You sign a Severance Agreement

With this in mind, what should you look for in a severance agreement? Here are five key factors to consider:

#1: Clarity of Compensation and Benefits

Your severance agreement should be clear about the compensation and benefits you are entitled to receive. It should clearly state how much compensation you are entitled to receive, whether you will receive installment payments or a lump sum, and how long you will remain eligible for benefits. If these provisions of your severance agreement aren’t clear, you could be taking a big risk by signing.

#2: Confidentiality, Non-Disclosure and Non-Disparagement Obligations

Severance agreements commonly include confidentiality, non-disclosure and non-disparagement obligations for employees. You should review these provisions carefully and make sure you are comfortable with the restrictions that you will need to follow if you sign.

#3: Non-Competition and Non-Solicitation Obligations

Severance agreements also frequently include non-competition and non-solicitation obligations. These provisions can severely restrict your future employment options or your ability to start your own business, so they require a thorough review and careful consideration as well.

#4: Provisions Regarding Unemployment

In some cases, employers will use severance agreements to try to prevent their employees from filing for unemployment. For example, they may do so by including clauses in their agreements that state employees are resigning voluntarily or being terminated for performance-related issues. You shouldn’t give up your right to employment benefits if you don’t have to (and you certainly shouldn’t do so inadvertently), so this is another area where it is critical to ensure that you are making an informed decision.

#5: Release of Claims Against Your Employer

Finally, and perhaps most importantly, severance agreements will almost always include a release of claims. If you sign a release of claims, you won’t be able to take legal action against your employer in the future. If you have experienced discrimination, harassment, retaliation or any other type of unlawful adverse employment action, you may be entitled to far more than the compensation provided in your severance agreement—and, in this scenario, signing may not be in your best interests.

To be clear, these are just examples of factors that you should consider before signing a severance agreement. To ensure that you are making an informed decision with your long-term best interests in mind, you should have your severance agreement reviewed by an experienced employment lawyer.

Schedule an Appointment with a Philadelphia Employment Lawyer at Murphy Law Group

Have you received a severance agreement from your employer? If so, we strongly recommend having it reviewed by a lawyer before you sign. To schedule an appointment with a Philadelphia employment lawyer at Murphy Law Group, call us at 267-273-1054 or contact us online today.