When the HR manager asks to meet with you, the result is rarely pleasant. Often these meetings result in an employee’s termination.

Your employer may give you a reason for the termination, or they may not. You might be given the opportunity to resign instead of being fired. In either case, your employer might owe you a severance agreement. What should you do?

What is a Severance Package?

A severance package is an agreement to terminate your employment for severance pay and benefits. Employers are not required to offer a severance package, unless an employment agreement requires severance upon termination. Severance may be pre-negotiated when you take the job.

A severance package may include an agreement not to sue your employer. Therefore, the employer benefits from providing you with pay and benefits when you leave the company. The agreement may also contain a non-compete agreement or other provisions that benefit the employer. 

There is no formula or standard for calculating severance pay and benefits. The terms of the severance agreement are offered by the employer. The employee can agree to accept the severance package, decline the package, or negotiate other terms. 

The value of your severance package depends on a number of factors. 

What Does a Typical Severance Package Include?

Severance agreements are legally binding contracts between employer and employee.

Items that are often included in a severance package include, but are not limited to:

  • General Release of Claims (you give up the right to sue your employer for all legal claims)
  • Non-Compete Agreement
  • Confidentiality Agreement and Non-Disclosure Agreement
  • Non-Disparagement Agreement
  • Severance Pay and Other Benefits
  • COBRA Health Insurance Continuation Agreement
  • Vesting of Stock Options and Retirement Accounts

Beware that the terms of the severance agreement may favor the employer. For that reason, it is best to consult with an employment attorney before you sign a severance agreement.

How Can an Attorney Help You Negotiate a Severance Agreement?

An employment lawyer understands the terms and conditions of a severance agreement. Your lawyer can ensure that the terms of the agreement are not one-sided. Your lawyer also ensures that non-compete agreements do not unfairly prevent you from obtaining new employment or starting your own company. 

When negotiating a severance package, an attorney also investigates the circumstances of your termination. Your attorney may uncover facts that indicate you were wrongfully terminated. If so, you may not want to give up your right to sue your employer without negotiating better severance terms.

Your attorney also reviews the terms of your employment agreement to ensure that you receive all benefits and pay you were promised when you were hired. For example, if your employer agreed to pay you a specific compensation upon termination, your attorney ensures that the severance package includes at least those amounts and benefits.

In some cases, termination of employment might be based on discrimination. If so, you want to carefully consider your legal options regarding discrimination complaints and actions before giving up those rights when you accept a severance package.

What Factors Impact the Terms of a Severance Package?

Company employment policies or an employment agreement may dictate the terms of a severance package. Without any company policies or an employment contract, the agreement is between you and your employer. An attorney works to get you the best severance package by aggressively negotiating the terms of the agreement.

Your lawyer highlights any factors that could favor you during the severance package negotiations. However, some factors might go against you during the negotiations.

Factors that can impact the terms of your severance package include, but are not limited to:

  • Your role with the company
  • How long the company has employed you
  • The size of the company, including the number of employees
  • Whether you have a valid legal claim against the employer
  • Company policies that dictate what is included in a severance package
  • Disputes regarding non-compete agreements 
  • Issues with non-payment of wages or benefits
  • Tax issues

You must consider how the terms of your severance package may impact your future career choices and financial stability. The severance pay and benefits may seem generous, but when you consider that you might be giving up some legal rights, the offer may not be as enticing.

Your attorney analyzes each section of the severance package. He can then discuss the pros and cons of the severance package and whether the package as it is right now is in your best interest. 

To learn more, call our San Diego law firm at (619) 693-7727 or contact us online.

Avatar photo

About The Author

Nicholas J. Ferraro

Nicholas J. Ferraro is a skilled labor and employment lawyer and the founder of Ferraro Vega Employment Lawyers, Inc. Based in San Diego, he focuses on representing employees in class action and collective litigation cases. Education: Mr. Ferraro attended the University of San Diego School of Law, where he was a member of the San Diego Law Review. Experience: Over a decade of legal practice, representing more than 100,000 employees. Court Admissions: Mr. Ferraro represents his clients throughout the State of California and the State of Washington. He is a member of the State Bar of California. Community Involvement: Active member of the California Employment Lawyers Association and the San Diego County Bar Association.