Severance Packages

Reasons for severance packages

There are no laws specifically requiring an employer to offer or give out severance packages to departing or departed employees. Some employers do this as a matter of policy, and some of the larger employers even have highly structured severance benefit plans for different classes of employees. Others may offer severance as a way of obtaining the release of employment-related claims, which an outgoing employee might otherwise be able to assert. Still others will only offer severance benefits if and when a newly terminated employee shows signs of asserting credible claims.

Reviewing your employer’s proposed severance package

An outgoing employee who is offered any severance package is well advised to get a lawyer’s evaluation of the draft separation agreement (i.e., what’s being offered and what’s being taken from the employee in return). The cost of a review is minimal, and there may be a means of improving upon the offer that is on the table. Even if there is not, it is still important to know what rights are being given up so that any decision to accept severance benefits and sign a legal agreement is an informed decision.

Negotiating a severance package

If you haven’t been offered any severance benefits, it may be that the employer is waiting to see what you’ll do. Will you simply go away? Will you call up or walk in and try to negotiate for yourself? Or will you retain reputable legal counsel whose business it is to represent you?
Some would-be clients decide to negotiate for themselves, preferring to avoid paying attorney’s fees in exchange for never knowing how much money they leave on the table by doing it themselves. If you are about to be one of them, good luck! The smart money is invested in legal advice and legal representation. In a significant number of cases, the outlay for attorney’s fees becomes a part of the severance package the firm negotiates – and the client ultimately gets the benefit of legal representation at little or no cost!

If you want help negotiating a severance package please call Ben Gray at 216-579-0800.