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Negotiating severance agreements: work with experienced legal advocate

In our previous post, we looked briefly at the importance of carefully approaching the negotiation of executive compensation. For employees, this is important to ensure fair compensation and appropriate job security, while for business, there is both the need to attract and retain high quality employees, and the need to balance financial limitations and manage risks.

The flip side of negotiating executive compensation is negotiating severance agreements. As with compensation agreements, employers and employees have their own set of concerns, and it is important for both to work with an experienced attorney to ensure their interests are represented in the final agreement. 

For employees, it is important not to sign severance offers right away, but to take some time to consider the terms before committing. This allows employees to ensure they have the opportunity to negotiate the best deal possible. The amount of bargaining power an employee has depends on various factors, including the employee’s position, the amount of time he or she has spent with the company, and the circumstances of the termination. Generally speaking, it is more difficult to negotiate severance agreements in mass layoffs, but it is still worth attempting. Long-time employees tend to have more bargaining power.

Employees should be particularly cautious about signing severance agreements involving waiver of the right to sue under discrimination and retaliation laws, as well as signing non-compete agreements. With severance agreements involving non-competition agreements, maximizing severance compensation is particularly important. This can include not only payment, but also extension of health benefits and potentially even the stated reason for termination.

 Employees have their own concerns in negotiating severance, of course, and should work with an experienced attorney to ensure they are thoroughly represented in the negotiation process.

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