Severance agreements, also known as separation agreements or release of claims, are contracts given to employees that are fired, laid off or quit. Employers are typically not required to offer any severance to employees, but employers often capitalize on the opportunity to mitigate the risk of litigation by getting a terminated employee to release all claims in exchange for monetary compensation.
First, and foremost, it is important to understand the terms of any contract you sign along with the consequences of those terms. Thus, it is advisable for you to have an attorney knowledgeable in employment law review the facts of your case and the terms of the severance agreement before you release your right to bring claims against your employer.
More importantly, you may be able to negotiate a more favorable severance package from your employer. Quite frequently employees are concerned about issues that may arise after they are terminated. You may wonder, what happens if a prospective employer contacts my former employer for references? Or, can I reapply to my former employer at a future date? Is my former employer releasing any claims against me? Severance agreement negotiation may allow you to negotiate more favorable terms or additional terms to the proposed severance agreement if it is either silent on these issues or you believe you are entitled to more money.