4 factors to consider in a severance offer

The success of a company generally lies in the strength of its operational documents. These documents can range from vendor delivery agreements to various employee handbooks and contracts. A severance offer is a document prepared by the employer that may set out certain terms and conditions regarding an offer of severance pay for a leaving employee. These documents should be carefully prepared, well-written and decisive.

When determining the terms and conditions of a severance package to be offered to an employee, employers should consider various factors including any statutory or contractual entitlements of the employee, and the relevant context such as the length of time the worker was employed by the organization and the reason for the termination of employment.

Both employers and employees should review four important things before offering or accepting a severance package:

• Identify any deadlines and act accordingly: The severance offer may contain language or various conditions that specify a deadline for completion. Both parties generally benefit from a reasonable time frame that permits the employee to properly consider the offer, but also creates certainty in the form of an end point for the employer as it finalizes any outstanding obligations to the employee.
• Thoroughly examine the terms of the agreement: Both parties must fully and properly review and understand the terms of agreement before offering or agreeing to a severance package. This is particularly the case because severance packages are likely to contain terms releasing the employer from future claims.
• Identify and understand ongoing obligations: Employees may have ongoing obligations to the employer even after the termination of their employment. The severance offer may deal with these ongoing obligations, such as by including restrictive covenants to protect the employer’s business. Both parties should identify and understand the clear parameters of any such ongoing obligations.
• Respect any terms regarding confidentiality: Many severance agreements will contain certain terms that require a level of privacy or decorum, namely, terms regarding confidentiality and non-disparagement. This may prohibit the employee from taking actions that may without thought seem innocuous, such as detailing previous work performed with your new employer. or sharing specifics of the severance package with friends along social networking channels. Both parties should understand and respect any terms regarding confidentiality.

Whether from the perspective of the employer drafting a severance package, or the employee preparing to sign a release in exchange for severance pay, the presence of a skilled lawyer is crucial. An experienced lawyer can help to provide the guidance you need.