A Severance Agreement (also called a severance package) is often given to an employee that is leaving the job.
The reasons an employer may offer a severance agreement to a departing employee vary. Sometimes, the employee has done good work, and the employer wants to give something in return.
Other times, the employee leaves under bad circumstances, and the employer is worried about getting sued. So, the employer offers some money and other benefits to the employee in exchange for a release of claims.
What are some common features of a severance agreement?
Although these agreements take many different forms, they usually have some of these features.
Something of benefit to the employee.
As stated above, the departing employee is usually offered money and perhaps other benefits (such as the employer continuing to pay for health insurance for some period of time).
There is no specific amount of money or benefits the employer has to offer. Usually, the money is expressed in terms of a number of weeks or months of the employee’s regular salary.
A release of all claims the employee might have against the employer.
Severance agreements often contain lengthy release language whereby the employee releases (or gives up) many different types of claims. This will, at a minimum, include any claim to further wages, workplace discrimination claims, wrongful termination claims, and the like.
There are a few claims that cannot be released or waived.
For example, the Equal Employment Opportunity Commission takes the position that an employee cannot waive the right to file a charge of discrimination with the EEOC.
Other claims required the approval of certain government agencies before they may be waived.
It is common for an employer to include a provision that the employee will keep the terms of the agreement confidential and only disclose those terms to close family members, an accountant and/or a lawyer.
In general, there is nothing wrong with such a provision.
But, the employee should be careful if (i) the agreement requires confidentiality about the employer’s business practices and (ii) the employee is aware of potentially illegal activities of the employer.
If the agreement can be read as requiring an employee to keep quiet about illegal activity of the employer, it could be interpreted as witness tampering.
Section 97-9-115 of the Mississippi Code makes it a crime for someone to solicit or encourage a witness in an effort to prevent or dissuade the witness from testifying about events that would incriminate another person in commission of a crime.
Remember who wrote the agreement.
Severance agreements are usually written by the employer’s attorney. As a result, they are drafted to protect the employer, not the employee.
If you have an doubts about the legal effect of a severance agreement that has been offered to you, seek legal advice. Let your lawyer look out for you.
Panter Law Firm, PLLC, 7736 Old Canton Road, Suite B, Madison, MS 39110