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Be cautious trading your signature for severance
Whether you have spent decades at your job or only a few months, receiving notice that management is terminating you can come as a blow. Few people have jobs they don’t depend on to meet their basic needs – rent or mortgage, car payments, and daily expenses like gas and groceries. To be suddenly out of work can throw the most solid budget into a tailspin.
If your company is offering a severance package, you may be tempted to snatch it and shake the dust from your shoes. While there is no law that regulates what an employer may or must offer in a severance package, having legal advice when you receive your offer may allow you to obtain a fair agreement without losing your rights.
A typical severance package
A severance package is not something companies offer to tide you over while you look for work. More than half of business have some plan for providing a cushion for employees they terminate. However, the main purpose of the package is often to protect the company from legal action. In other words, your company may be offering compensation for your departure, but they want something in exchange.
Some of the common benefits offered in severance packages include these and others:
- A certain number of weeks’ pay, depending on how long you worked for the company
- Compensation for any sick days or vacation days you did not use
- Continuation of health benefits for a limited time
- Assistance finding new employment
In return, you will likely sign an agreement that includes the following or similar provisions:
- Forfeiture of your rights to pursue legal action for your termination
- Agreement to refrain from negative comments about the company
- Non-compete agreement, prohibiting you from seeking work at a competing business
Your employee handbook may outline the types of severance packages your company offers. Of course, they will not offer you severance under all circumstances. For example, if the company terminates you for cause or you quit on your own terms, you will probably get nothing. Additionally, if you are paid hourly, your position may not qualify for your company’s severance package.
Before you sign a document agreeing to the terms of the severance, you may benefit from allowing an Arizona employment law attorney review the terms. This may be especially important if you believe the termination to be the result of your actions as a whistleblower or other violations of your employee rights. You certainly do not want to sign away your option to seek legal redress if the company has violated your rights.