More than 2 million Americans voluntarily leave their jobs every month in the US, with millions more leaving involuntarily through termination. Rare is the case of an employee collecting a cushy severance package when exiting of their own volition. Unless, of course, it pays for a company to help transition an employee who resigns and, for example, may be a holder of critical company information. A nice monetary send-off may help tighten potential loose lips or ensure continued good relationships.
Of the millions and millions of other employees who are off boarded involuntarily, most generally walk away with very little or nothing, unless they hold upper-middle or senior-level positions with significant years of service to warrant a severance pay out or they are part of a larger layoff or downsizing and a company wants to prevent bad press that could result form sending off employees without assistance. In the latter instance, assistance may not be monetary in nature, but rather career counseling, resume writing or cover letter preparation.
In the devastating moment of job loss, a monetary severance can help ease the pain and provide a cushion while finding new employment. It can be a great benefit, making you eager to sign on the dotted line, but it’s also not without risks.
Most severance agreements include terms legally binding you to abide by them after you’ve signed the agreement, and most of those terms favor the employer, not you. For instance, you may be forbidden to take legal action against the employer or defame the company in any way. If you are fired for age discrimination or retaliation, you can’t bring suit against the company after you sign a severance agreement. Think twice and take your time before signing. Most agreements have a deadline and provide time for you to fully consider the terms.
If you also signed a non-compete agreement at the onset of your employment, you will most likely be unable to immediately find work in the same field. Signing a severance agreement may make it impossible to legally appeal the non-compete agreement even in cases of hardship in which you can’t find employment outside of your field.
If you are offered a severance package, heed the following advice:
- Don’t sign a severance agreement unless you have to. If you have a nest egg, as most people should, to protect you in the event of losing a job, rely on that instead. You won’t be legally bound to the stringent restrictions built into most agreements and will be able to walk away with a greater degree of freedom.
- Find a reputable labor attorney who can review the agreement and advise you before signing. A legal professional can walk you through all of the terms and make sure you understand the extent of the restrictions.
- If you do need to sign an agreement, you may also be able to negotiate the terms before signing. You could secure more compensation or benefits for a greater period of time, instead of what is originally stated in the agreement.
- Understand the consequences of what could happen if you do sign and then break your agreement. The penalties could be severe.
Whether or not you accept a severance agreement and the terms, walk away, move forward and commit to not disparaging the company. You want to heal from the experience. Speak favorably about the positives of your work experience and those you worked with. Protect yourself from potential libel and from having any negativity backfire on you with the company speaking unfavorably about you and your work.