What Is a Severance Package?
A severance package is when an employer agrees to pay money to a departing employee in exchange for, among other things, the employee signing a release of all legal claims. The Severance document is a legal document drafted, typically, by the company’s attorney and has a number of legal obligations for the employee if the employee accepts the money and signs a release of legal claims. It is important for the employee to have their own attorney to review the document to help the employee assess their legal obligations and responsibilities, as well as the company’s obligations and responsibilities. In addition, it is important to assess whether the severance package may be negotiated and, if so, what the risks and rewards may be.
Is Severance Pay Required in Austin?
Severance is not typically required, unless the company has a written severance policy. A company does not usually have a written severance policy because it wants to assess each separation of employment on a case by case basis. Severance is typically discretionary with the company and depends on the circumstances of the employee.
Employers may offer severance packages for many reasons including:
- The company wants to recognize an employee’s years of service and contribution to the company;
- requiring the employee to acknowledge or to implement a non-compete agreement that would prevent the employee from competing against the company for potentially years;
- The company is worried about litigation, and wants to protect itself;
- The employment contract between the employee and the employer includes information about a written severance plan;
- the main reason a company will offer a severance is to require the employee to sign a release of all legal claims and require the employee not to file any lawsuits against the company
What’s Included in a Severance Package?
As mentioned above, a severance package will include severance pay, which is sometimes based on the length of the employee’s position with the company. In addition to payment that’s based on years of service with the company, a severance package may also include payment for accrued or unused paid time off, such as holiday time or sick time; retirement benefits; stock options; bonuses; and more. Sometimes, a severance package will even include services such as helping the employee obtain a new position in a different company. What’s included varies on a case-by-case basis, and will vary dramatically depending on the company, the employee’s position and the number of years of service, and more.
Why You Should Work with Our Austin Severance Package Lawyer
While it may be tempting to accept a severance package without first speaking with an employment lawyer, doing so is certainly not recommended. Instead, you should consult with an attorney who specializes in reviewing severance agreements and can help you to determine whether or not you have any legal claims against the company, understand the terms and conditions of the agreement, make sense of any tax consequences of the severance package, determine whether or not there are other benefits or services than the company may be able to offer, and more. In addition to the above, it’s important to note that there are additional provisions and stipulations embedded with a severance package. As mentioned above, for example, an employer may require that an employee release all claims against the employer in accepting the severance agreement. Other provisions that may exist include non-compete provisions, non-solicit provisions, confidentiality provisions, non-disparagement provisions, arbitration and cooperation provisions, no rehire provisions, and more. These provisions, and others, may have a significant effect on your future, and should not be agreed to without a thorough understanding.
Do Not Sign Away Your Legal Rights
One of the biggest mistakes that a person can make is accepting a severance package without having it first reviewed by an experienced and board-certified Austin employment lawyer. Once you accept a severance package, you are relinquishing your rights to pursue further benefits, and may also be giving up your right to pursue any claims against your employer. We urge you to not sign away your legal rights without consulting with an attorney first.
Call Our Austin Severance Package Attorney Today
At the Law Office of Jeffrey A. Goldberg, our Austin severance package attorney understands how important a severance package is and why you want to get the best package possible. When you call our experienced Austin employment law attorney, you can benefit from the counsel of an attorney with years of experience and skill in reviewing and negotiating severance packages. For assistance from our law firm, please call us today at 512-598-4147 or send us a message telling us more about how we can help you.