FAQ’s About Severance Agreements

From Guest Contributor: Roger Brent Hatcher

Severance agreements can range in length, benefits and any number of factors related to the employee and the company. Oftentimes, though, the larger the company and the more important the executive the more complicated this document can become. If you’re entitled to a severance package it’s important to understand your rights as an employee. Hiring an experienced attorney to represent you is the only way to know for sure that you’re getting what you deserve. However, many people don’t know this, nor any other aspects of a sound severance agreement. Here are some of the most frequently asked questions about these documents.

What is a severance agreement and does my company have to offer one?

A severance agreement is a contract between a company and an executive-level employee that states that in the event that you’re let go from a job you’re entitled to certain pay and benefits upon your exit. In exchange, you agree not to sue the employer after the fact and give up the right to any proprietary information you may have acquired during your tenure there. The company in no way has to offer one and in many cases will not.

Am I entitled to a severance agreement?

No. It’s 100% up to the company to offer a severance agreement and in many cases they will not. It depends on the company, the employee and several other factors as to whether or not one is offered.

If I sign a severance agreement, can I still sue the company?

No. Upon signature of a severance agreement you are relinquishing your right to take any sort of legal action against the company. If the severance agreement is unacceptable it’s up to you to negotiate before you sign it. It’s smart to have an attorney on hand to ensure that you’re getting what you deserve in the agreement.

Do I have any negotiating power with a severance agreement?

Yes, but you should be careful. As soon as you attempt to negotiate the terms of the agreement with the company it’s considered a rejection and what you’re offering during a negotiation is known as a “counter offer.” The counter offer can be either rejected or accepted by management so you could wind up with what you want but you could also end up with absolutely nothing. It’s important to have the assistance of a qualified attorney if you’re considering a severance package negotiation.

Should I hire an attorney?

Yes. Anytime you sign a contract, which a severance agreement is, you should have legal counsel representing your interest and protecting your rights. Think about it this way; the company most likely has a team of lawyers that created the document. Shouldn’t you have the same level of professional expertise on your side?

When in doubt, always call a reputable employment lawyer. They’re trained to help you with situations just like this. Most initial consultations are free to make an appointment to discuss the terms of your severance agreement.

This article was written by Roger Brent Hatcher, an attorney at Smith, Gilliam, Williams & Miles, a leading Atlanta Law Firm since 1928. Smith, Gilliam, William & Miles specialize in everything from family law to business law.