What happens if I refuse to sign a severance agreement?

However, in most cases, an employer is free to condition severance on the employee signing the agreement. In other words, if the employee refuses to sign, the employee won’t get any severance pay.

What should I expect in a severance agreement?

For example, you may receive severance pay in return for a promise not to sue your employer for creating a hostile work environment or allowing you to be harassed. In a perfect world, the terms of the severance agreement would be fair to both sides. But the harsh reality is that most severance agreements are more advantageous for the employer.

Can a company offer an employee a severance package if they are fired?

Yes, although an employer is not required by law to provide severance packages to employees who are terminated or fired, many employers offer a severance package in exchange for the employee’s agreement not to bring a lawsuit for wrongful termination.

Can a employer withhold pay if you sign a severance agreement?

As such, an employer is legally permitted to withhold severance pay from an employee who refuses to sign a waiver of a right to sue document. However, there are some exceptions to this general rule of thumb wherein an employer may be bound to offer severance pay to an employee.

When to sign a severance agreement to avoid a lawsuit?

Give the employee plenty of time to decide whether to sign. It is reasonable for an employee to take a week or two to decide whether to give up the right to sue you. You might even suggest that the employee consult with a lawyer to review the agreement. Avoid any hint of coercion.

How long do you have to sign a severance release?

Certain states like Michigan give employees 21 days to decide if they want to sign the release and accept the severance. An employer is sometimes required to provide severance. These circumstances include:

How long does it take to revoke a severance agreement?

Under the protection of the ADEA, employees have a time period of at least 21 days to consider whether or not they should accept the severance package and at least 7 more days to revoke the agreement.

Is it legal for a company to offer an employee severance?

Generally, companies are not legally required to offer severance packages. However, companies promising such payments in employee contracts or policy manuals will typically be required to fulfill their obligations. Severance packages may also be offered to settle potential employee lawsuits such as wrongful termination.

Can a company offer you severance without a release?

At some level, this is a business decision, depending upon the culture of the workplace. However, offering severance without getting a release may not always be a best practice. Conventional wisdom suggests that if the employer is offering severance, it should get a promise not to sue, in exchange.

Are there any traps in a severance agreement?

And employees often ask for a “mutual” non-disparagement clause. Agreeing to such a mutual non-disparagement clause, without carefully drafting the language, can be a dangerous trap for employers. A mutual non-disparagement clause in which “the Company agrees not to disparage the employee” is almost impossible for the Company to honor.

When do you need to sign a severance agreement?

When employees are provided severance agreements before their last date (s) of employment, employers are often in a hurry to get the employee’s signature on the agreement, even before the last date of employment. Presumably, the employers in these situations want a resolution of some kind.

Can a company withhold severance if you sign a release?

For example, if your employment contract says you will be entitled to two weeks of severance for every year of service, and the contract doesn’t mention giving up the right to sue, your employer may not withhold your severance pay until you sign a release.

What not to do in severance agreements with employees over 40?

All severance agreements for employees over 40 must specifically refer to the Age Discrimination in Employment Act rights. This means directly citing the ADEA to the employee. Failure to reference the ADEA to employees may result in a lawsuit.

How much severance do you get when you leave your job?

A: Every severance agreement is different. Some employers offer one or two weeks of salary as severance pay, while others use a formula based on your current salary and your years of service for the employer. And, some employers have different packages for different levels or tiers of employees.