In general, it is a good business practice for employers to present a severance agreement to departing employees when a company has a reduction-in-force or terminates an employee.  At its core, a severance agreement is an agreement between an employer and the departing employee where the departing employee releases potential legal claims against the employer in exchange for receiving monetary benefits to which the employee would not otherwise be entitled.

The agreement is valuable to both an employer and an employee.  From an employer’s perspective, obtaining a release of potential legal claims by the departing employee is the only vehicle that assures that the departing employee will not bring legal action against the employer regarding the employee’s separation of employment.  From an employee’s perspective, severance allows the employee to obtain additional compensation while transitioning to new employment.

Typically, severance agreements include various core provisions.  Among such provisions included in severance agreements are general release of claims language, non-disparagement language, confidentiality language, and choice of law/choice of forum provisions.  Since severance agreements involve the waiver of important legal rights, it is a good practice for employees to consult with an attorney prior to signing such an agreement.

If you have any questions about severance agreements and/or have been presented with a severance agreement by your employer, please contact the Law Office of Frank A. Custode, LLC.