Severance agreements are frequently offered by employers to avoid expensive and public litigation between employers and terminated employees. A severance agreement is a contract between an employer and employee that waives certain legal rights of the employee in exchange for severance pay or other benefits such as continued health benefits, additional salary payments, letters of recommendation or other offers.
Severance agreements may also include critical non-compete, non-disparagement and confidentiality provisions, as well as releases requiring the employee to give up any and all claims she may have against the employer. Such agreements may also impair the employee’s ability to obtain unemployment benefits. Before signing, it is important that you be knowledgeable of the terms of the agreement.
If you’ve been offered severance in return for signing an agreement, it is advisable to contact an attorney before signing.