When facing the end of one’s employment, the forthcoming days can seem daunting for many employees. One critical cushion during this transition is the severance package. Beyond being a mere financial payout, a well-structured package reflects the company’s recognition of the employee’s value and dedication. But what makes a fair severance agreement?
Core Components of a Comprehensive Severance Agreement
At the foundation of every severance package is monetary compensation. Typically, this amount varies based on several factors, including your tenure with the company, your role, and the company’s financial standing. However, it’s essential to ensure that this sum is equitable, given your contribution and the circumstances of the end of your employment.
Continuation of Benefits
Beyond your paycheck, a considerable portion of your compensation likely comes in the form of benefits. A well-rounded severance package should, ideally, continue these benefits for a specified duration. This can encompass:
- Health and dental insurance via paying for COBRA continuation
- Life insurance
- Retirement contributions or access to retirement funds
Offering services that help you transition to new employment is a hallmark of a supportive employer. This might include:
- Career counseling
- Employing a headhunter
- Resume-writing workshops
- Interview training
Paid Unused Time Off
If you have accrued vacation, personal, or sick days that you haven’t used, your severance agreement could compensate for this unused time.
Other Considerations in a Severance Agreement
Waiver and Release of Claims
Employers will (almost 100% of the time) include a clause in the severance package requiring you to waive all of your legal rights against the company. Before agreeing to such terms, it’s crucial to understand what you’re relinquishing.
Non-Compete and Non-disclosure Agreements
Some packages may also carry stipulations limiting your ability to work with competitors or disclose company-sensitive information. Ensuring that these clauses are reasonable in both scope and duration is key.
Recommendations and References
A valuable addition to any package is the company’s commitment to providing positive job references. This can be pivotal for a smooth transition to new employment.
Learn What Benefits Should Be Included in Your Severance Package
A severance package post-RIF should not merely be a token gesture. It should adequately reflect your dedication, efforts, and the unforeseen circumstance you find yourself in due to the end of your employment. By being informed about what constitutes a fair and comprehensive package, you’ll be better equipped to navigate discussions and secure one that supports your future plans. Contact MSB Employment Justice today to speak with one of our talented attorneys about the benefits that should be included in your severance package.