Severance, severed, chopped, cut-off, axed….there is something about these words that do not create that warm, fuzzy, feel-good feeling. How do you deal with this process when losing your job happens to you? Maybe companies can start by changing the name of the severance agreement to something like a ‘we are going to miss you’ agreement or ‘thanks, let’s be friends’ agreement to make you feel better. But, since that probably will not happen, here are a few thoughts. Wikipedia gives an excellent definition of a severance package as pay and benefits an employee receives when they leave employment at a company.
In addition to the employee’s remaining regular pay, it may include some of the following:
- An additional payment based on months of service
- Payment for unused vacation time or sick leave.
- A payment in lieu of a required notice period.
- Medical, dental or life insurance
- Retirement (e.g., 401K) benefits
- Stock options
- Assistance in searching for new work, such as access to employment services or help in producing a résumé.
So, what should you do when you are faced with the decision of signing a severance agreement? If you feel you have unfinished business with your employer, do not sign until you have an attorney review. Recently, a displaced worker who signed a severance agreement was very concerned that they would not be able to receive justice after being harassed for years by their former boss. I immediately asked why they signed the severance agreement in the first place (the same question a good attorney would ask if this case went to court). However, I knew the answer. When faced with losing your job and income, the opportunity to sign the agreement to receive pay is extremely tempting. Your employer knows that and is using that as leverage.
Here are some tips:
- During the emotional time of losing your employment, take some time to research your rights as an employee within your organization. That is, review the employee manual, employee intranet, and of course study the severance agreement itself.
- Look into any options to negotiate with your employer regarding staying on as a contractor, receiving a stay-on-bonus to guarantee completion of any outstanding projects, and extending any necessary benefits.
- Don’t forget to be on the look-out for any non-compete agreements located in the fine print that may affect your means to create new income. If this is really confusing, contact a lawyer. If available, use your company’s Employee Assistance Program to help you conduct research to find an affordable attorney in your local area.
- Last, words of wisdom – Take your time, before you sign.
