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Negotiating your Severance Agreement
by Mark R. Carta, Partner

You are summoned to the HR office and told in a perfunctory manner your services are no longer required. At some point in this “meeting” you are handed a Severance and General Release Agreement (“Agreement”). You are not familiar with such a document and find your Agreement confusing and legalistic. What do you do now?
The process of trying to negotiate more favorable severance terms need not be a mere plea for your employer’s generosity. It is important to appreciate that signing your Agreement is only one of your options, albeit in many cases the best option – that is, if you have negotiated a severance package tailored to your needs.
Your Leverage To Negotiate An Enhanced Severance
If you have an employment contract or are entitled to severance under a company policy or past practice, the first step is to review carefully the extent to which you were already entitled to severance benefits. In addition to reviewing your employment documents (e.g., employment contract, employee handbook and any benefits document or website), ask HR about the severance benefits your employer is contractually bound to provide. If possible, confer with former employees to ascertain what severance benefits your employer has provided in the past. These are, however, only the first steps.
The Agreement you have been asked to sign is, in part, your employer’s attempt to obtain certain “benefits” from you. Your task is to understand fully what you are giving up and to negotiate the most advantageous exchange of “benefits.” Chief among your employer’s objectives is to obtain an unqualified release of all your possible claims. Generally, the release provisions are accompanied by one or more provisions that prohibit you from suing or cooperating with anyone else who sues your employer. Your employer typically will also seek to obtain written confirmation of any restrictive covenants and confidentiality provisions that affect your post-employment conduct. Increasingly, employers also want you to agree to provisions that create an affirmative duty to cooperate with them in the future and that restrict what you may later say about your employer and fellow employees. Your employer’s desire to buy peace and to affirm its restrictions on your future conduct are legitimate objectives and of real value to your employer. They, along with the goodwill and relationships you have established within your company and among those it serves, are the source of your leverage for negotiating a fair severance package and an even-handed severance agreement. The point is: you do not need to have a written employment contract or other documented right to severance benefits to negotiate your Agreement.
Conclusion
Negotiating an even-handed severance agreement in most instances is your best option. It is not, however, your only choice.
Depending on the complexity of your Agreement and the value of the severance benefits under negotiation, you may choose to seek counsel to understand fully the legal consequences of signing your Agreement and to negotiate the most advantageous Agreement. Similarly, if you believe you have been wrongfully discharged, you may elect to obtain an assessment of your potential legal claim. When confronted with a severance agreement, keep in mind that you have leverage to negotiate its terms.