Leaving Your Job? Do Not Get Screwed – A Guide to Severance Agreements 

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So you are moving on! Leaving your present career, whether for a new opportunity or a shift in direction, may be an exhilarating experience. But, amid packing boxes and goodbyes, there is one important element to remember: the severance agreement. This contract describes the conditions of your departure, including any financial compensation you may receive. 

Understanding severance agreements (and successfully negotiating them) is critical to facilitating a seamless transfer and preserving your future job opportunities. You can consult a professional to get help with severance agreement guides

Understanding severance agreements 

A severance agreement is a legal contract signed by an employer and an employee upon termination that outlines each party’s rights and duties. The contract specifies any benefits that the employee will be entitled to, such as severance money or insurance coverage. It also assures that the employee accepts that the employer did not unlawfully dismiss them from their position.

What does a severance agreement do? 

The primary goal of a severance agreement is to ensure that the departing employee does not pursue a wrongful termination case against the company. With a legally binding contract, the employee cannot sue the employer.

On the other hand, offering severance compensation to an employee, while it helps get the contract signed, might be interpreted as an indication that the company cares about the individual’s future success. Nobody wants to be fired from their work with no salary to support themselves or their family, even though at will employers can do so.

By giving a salary and a contract, you may reduce tensions and ensure that your firm is transparent about health insurance changes, benefit adjustments, and everything else that happens when someone is let go.

What does a severance agreement include? 

The contents of a severance agreement will differ per firm, but some elements are:

  • Relevant dates 

The document should include their employment dates (hiring and termination), as well as any timetables for perks or other agreed-upon parameters.

  • Severance pay 

The amount of severance pay offered varies depending on the length of work and can be received as monthly payments over time or as a single sum. This section may also provide information about how the organization will pay employees for unused paid time off or vacation benefits.

  • Health insurance 

According to the Consolidated Omnibus Budget Reconciliation Act (COBRA), terminated workers are permitted to continue receiving company-provided health care for up to 18 months. The document should describe this condition and specify the coverage’s expiration date.

Your severance agreement should be a dynamic contract that you may make changes to as needed. As rules change, which they do frequently, you must ensure that you are compliant and up to date. Work with legal professionals to ensure you have everything covered. 

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