A separation agreement, often known as a severance package, is not legally required of you to sign. There are situations in which you would not want to sign: if it would unreasonably limit your professional future, you don’t completely comprehend the agreement, the severance package is insufficient, you don’t have legal representation, and you intend to sue your company after your termination.
If any of the above situations apply then we invite you to first contact an employment law attorney by calling PLBH at (800) 435-7542. We can help you determine if it is in your best interest to sign.
When should I refuse to sign a severance agreement, if ever?
You are not required to sign a severance agreement if it does not serve your interests. These contracts, also referred to as separation agreements, are legally binding. You and your employer reach an agreement to part with something in exchange for something else.
Typically, that conversation goes like this: You consent to refrain from bringing legal action against your employer regarding your former employment and termination in return for severance compensation and other benefits.
In many circumstances, you also consent to refrain from mistreating your employer in any other way following termination. Generally speaking, you must not engage in soliciting clients, customers, or coworkers of your employer is prohibited. It might also keep you from competing with your employer, disclosing trade secrets, and speaking ill of your employer after termination.
However, there are several reasons why you can decide against signing such a contract.
Do not sign if you intend to sue your employer
The likelihood that you may file a lawsuit against your company after being let go is perhaps the most frequent reason why people do not want to sign a severance deal. Employers mostly utilize severance agreements to prevent you from suing them. Because of this, many fired employees do not receive one.
If your employer does offer you a severance payment, it means they believe you may have a case against them. They are willing to pay for you to give up your right to sue, and they want you to do it. “Waiver of claims” or “release of claims” will be a crucial clause in the severance agreement. The types of cases you agree to drop in order to obtain the severance compensation will be listed in that clause. They often include wrongful termination, harassment, and discrimination.
Do not sign if the severance package is insufficient
The severance payout is insufficient, which is another frequent justification for refusing to sign a separation agreement. You can decline to sign the contract if you feel the price is too low. In general, severance agreements are not one-sided contracts. They can be worked out. If you have leverage, you can enhance the amount of severance money being provided.
Do not sign if you lack legal representation
If you do not have legal representation, you should also avoid signing a severance agreement. Before signing a severance agreement, you should seek legal counsel from a lawyer for a number of reasons. The terms of a severance agreement can be complicated to understand, the rights you are agreeing to waive may not be able to be waived, rendering that portion of the agreement unenforceable, and you might not fully understand how strictly the agreement will regulate your conduct after termination.
An attorney will have the knowledge necessary to determine whether the severance package is adequate. It’s crucial to establish an attorney-client relationship with a lawyer from an established employment law company.
Do not sign if the contract limits your future options
Many severance agreements severely limit your options after being fired. They typically have a non-disparagement clause that prohibits you from criticizing the business. Severance agreements can make it difficult for you to support yourself or find work. The most typical way to accomplish this is with a non-compete clause. In the severance agreement, there is a clause like this. You are prohibited from doing business with your former employer.