A severance agreement is a contract, or legal agreement, between an employer and an employee that specifies the terms of an employment termination, such as a layoff. Sometimes this agreement is called a “separation” or “termination” agreement or “general release of separation agreement and covenant not to sue.” Like any contract, a separation agreement must be backed by “consideration.” Consideration is something of value to which a person is not yet entitled and that is given in exchange for an agreement to do or refrain from doing something.
The consideration offered for the waiver of the right to sue cannot simply be a pension benefit or pay for earned vacation or sick leave to which the employee is already entitled, but must be something of value in addition to any existing rights. of the employee. . An example of consideration would be a lump sum payment of a percentage of the employee’s annual salary or periodic payments of the employee’s salary for a specified period of time after termination. The employee’s signature and retention of the consideration generally indicate acceptance of the terms of the agreement.
The federal law, the OWBPA, establishes specific requirements for a “voluntary and knowing” release of ADEA claims to ensure that an employee has every opportunity to make an informed decision about whether or not to sign the waiver. There are additional disclosure requirements under the statute when exemptions are claimed from a group or class of employees. Even when a waiver meets the requirements, a waiver of age claims, such as Title VII waivers and other discrimination claims, will be invalid and unenforceable if an employer used fraud, improper influence, or other improper conduct to compel the employee to sign it. or if it contains a material error, omission or misstatement.
When employers decide to reduce their workforce by laying off or laying off a group of employees, they generally do so under two types of programs: “exit incentive programs” and “other termination programs.” When an exemption is offered to employees in connection with one of these types of programs, an employer must provide sufficient information about the factors it used in making the selections to allow laid-off employees to determine whether older employees were laid off while the youngest were retained. . Even if you say goodbye to your employer amicably, be sure to ask for advice on whether you should sign it, whether the terms are reasonable, and whether you should ask your employer to change any of the terms. Make sure you understand what you are giving up in exchange for severance pay or benefits. Your employer has its own lawyers and human resources department working against you. You need HR and legal experts on your side to help you get the best severance package!
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As the nation’s leading provider of labor negotiations advice, the legal and human resource experts at Career Protection® have protected the careers of professionals in the United States, Canada and Europe. Career Protection has negotiated hundreds of employment agreements and severance packages. Career Protection’s human resources and employment law experts have previously served as vice presidents of human resources, directors of human resources, corporate counsel/lawyers, or recruiters for many Fortune 500 companies and global corporations.