Business Tips

What You Need to Know About Severance Agreements as an Employee

Anyone who’s worked in the corporate world understands that negotiating a severance agreement is a necessary evil. Whether you’re an employee hoping to leave on good terms, a manager dealing with an employee planning to go to the company, or a business owner considering the severance package for an employee leaving, severance agreements are essential. However, as anyone who’s ever negotiated one knows, severance agreements are seldom a smooth process.

Here’s what you need to know about severance agreements as an employee.

What is a Severance Agreement?

A severance agreement is a contract that outlines the terms of your separation from your employer. It can be an oral or written agreement, but it’s almost always a legally binding contract. When you and your employer sign a severance agreement, you agree to separation at some point in the future. The agreement specifies, in detail, the terms of your separation and the payments that you’ll receive.

How to Negotiate a Severance Agreement

While it’s true that many companies will try to lowball you on your severance, negotiating a severance agreement is a lot like negotiating any other contract. The best way to do it is to be prepared. Be polite but direct, firm, and confident. Take copious notes throughout negotiations, and be ready to challenge anything that sounds off. You’re also going to make sure that you have all the facts and figures correct before entering negotiations.

What goes into a Severance Agreement?


The law dictates the terms of a severance agreement. As an employee, you have valuable leverage when negotiating a severance agreement. But when it comes to dealing, you may want legal help to ensure you get the right package for your needs. 

  • Severance agreements are nearly as different as people who write them. Each company will have different policies and different needs, but here are a few things that you’re likely to see in a severance agreement: 
  • What type of information the employee must not reveal or disclose 
  • What kind of information the employee must keep confidential – 
  • The employee’s obligations upon departure, especially if they are leaving the company or starting their own business – 
  • How the company will compensate the employee if they go soon after signing the agreement.

You want to look at several different factors and make sure all of these are included in your agreement, such as the right to claim unemployment benefits if needs be, your pension and health insurance coverage, any retirement or pension plans you were eligible for, whether or not out service adjustments can be made until you find the proper job role.

Company perks such as a company car or health club memberships along with the most critical aspect the service pay packet you are entitled to. If you have legal representation, you will have full support if you have to enter a severance dispute with your employer.

How to Confirm a Severance Agreement is in Place

Once you have the severance agreement in place, the best way to ensure that the company stays on the right side of the road is to confirm that it has it in place. This can be done in many different ways. You can call your HR department and ask if a severance agreement has been signed and, if so, when it was signed. You can also contact your employer and ask them if they have signed a severance agreement. 

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