Partner Article

Interests in the preparation of Severance agreements

A severance agreement is a critical part of the relationship between employer and employee. But you have to be very careful in the development of this document. Here are some things that are worth paying attention to. Severance agreements are incredibly one-sided because they’ve been drafted by your employer’s legal counsel. Your former employer wants you to sign that agreement and for a month’s salary, it’s getting tens to hundreds of thousands of dollars of value from you in exchange for a few thousand dollars. Also, there is no need to sign a severance agreement to get that money if an employee is already entitled to receive a severance payment, whether under an employment contract or company policy. An attorney can help ensure that if the employee does sign an agreement, it provides more than any severance payment the worker was already entitled to. Experienced lawyers may also have a sense of whether the amount of separation the employer is offering is within the usual range for the relevant profession or industry. You should also remember that if you are a professional or management employee, you are also likely to be asked to take on numerous future obligations to your employer such as:

• refraining from making disparaging or derogatory or false statements about your company to anyone but, perhaps, your family members or attorneys;
• refraining from competing with your former employer or soliciting business from its clients or customers, actively or not;
• keeping all of the information confidential whether you believe it to have been confidential or not.

Severance agreements usually include a clause barring the employee from disparaging the former employer. A lawyer can negotiate for a reciprocal prohibition on the employer (or a select group of employees, which can include executives) against disparaging the worker. Also, the employee’s attorney can negotiate how references will be handled and what information will be provided to potential future employers. If you don’t want to miss all nuances of the document, you should hire a lawyer to track all processes. It gives you a guarantee that the paper will be drawn up correctly.

This was posted in Bdaily's Members' News section by Sarah Baranowski .