Our office remains open to serve your important legal needs during these turbulent and challenging times. We are happy to schedule client consultations and client meetings by telephone or video-conference at your request.
Bryan E. Kuhn
Counselor at Law, P.C.
Business & Employment Law Attorney

What should you include in a severance agreement?

Having a good severance agreement can make life much easier for employers and their employees who are being let go from their jobs (potentially unexpectedly). With a severance agreement, there are guidelines and rules set to determine what happens when an employee is terminated. This may include information on how much the employee will be paid, if they will retain any benefits and other details.

The contents of a reasonable severance agreement will vary based on the employee and how long they’ve been at the business. Here is more information on a severance agreement and package, so you can decide on one that is right for your business.

How do you create a reasonable severance package?

Usually, a severance package will include compensation for a certain amount of time. This tends to be payment for up to two weeks per year worked, but some businesses pay more or less. It’s typical for middle management and executives to receive higher payouts with a severance agreement.

Do employees have a right to refuse a severance package?

Yes, they can refuse it. If they refuse it, your business may not need to pay out that severance, which is something to discuss if that time comes.

What are some common details included in a severance agreement?

Some of the common issues addressed in a severance agreement include:

  • Confidentiality rules after a person is terminated from their role at the company
  • The date of the person’s termination
  • Details on benefits and how long the employee will be able to access them
  • Indemnification against further claims
  • Compensation details

You may want to include other topics in your agreement as well.

Is it a good idea to offer severance pay?

It can be. It usually helps your employees stay financially stable while looking for new work, at least temporarily. This also makes it less likely that your past employee will attempt to defame or bring harm to your company, since they will be bound by the terms of the agreement, such as agreeing not to sue the company for their termination in exchange for the severance package.

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