Employers are still feeling the financial pinch following the economic crisis that emerged during the Covid 19 pandemic. Unfortunately, many businesses have been forced to terminate employees, with more job losses forecasted in the coming months and years.
When an employee is fired, some are presented with a severance or termination agreement, which may include a promise of severance pay and the continuation of insurance coverage in addition to the payment of unused sick days and vacation time, stock options, and retirement benefits.
Before signing an agreement, an employee must consider what they are giving up in exchange for entering into the agreement. For example, an employee may be asked to waive their right to pursue an employment discrimination claim against an employer in exchange for severance pay and other benefits. They may be asked to enter into a non-compete agreement that will limit their options to find alternative employment for a period of time within a certain geographical location.
Negotiating a Fair Severance or Termination Agreement
Beyond matters that involve employment related litigation such as discrimination, it is important to identify if a severance package is fair. Employees have a right to negotiate a better severance package, reflective of their time and contribution:
- Start by evaluating the value of the legal claims you are releasing. If you have suffered employment discrimination, it may be better to litigate the issue in court rather than waiving your rights to pursue compensation
- Typically employees receive severance commensurate with the length of employment paid in a lump sum or over a period of weeks – often one to two weeks of pay for every year of service. To maximize the severance pay, an employee may want to negotiate a better agreement by emphasizing their contributions, accomplishments, and commitment to the company
- A severance package may also be negotiated to include bonus money, profit sharing, outplacement services, letters of recommendation, and time needed to secure a comparable job
- Although severance pay and other terms of a severance package is at an employer’s discretion, many employers are willing to negotiate wanting to keep their reputation untarnished by treating an employee fairly. If successful, be sure to get the severance package offered in writing. If negotiations fall short of an employee’s desired result, it is certainly ok to terminate employment without signing a severance agreement or receiving severance pay, leaving an employee free to seek alternative employment without the constraints of a non-compete agreement or waiving their right to pursue claims against their employer.
Contact an Experienced Employment Lawyer for Help
The best rule of thumb is to work with an experienced employment law attorney when negotiating a severance package. A knowledgeable severance agreement attorney can help you negotiate a more favorable agreement. Contact the Wisconsin employment law attorneys of Alan C. Olson & Associates for immediate assistance at 262-785-9606.