A severance agreement (aka separation agreement) is a contract signed upon termination of employment (whether voluntary or involuntary) between an employer and an employee in which the employer typically agrees to pay the departing employee a said amount of wages and or benefits in exchange for the employee giving up their legal rights in suing their employer against any legal claims. Illinois law does not require businesses to provide severance to employees upon termination. Some businesses choose to provide severance in exchange for full and final release of claims.
Before signing a severance agreement, allow Heitz & Bromberek to review your severance agreement. If you are an employer we can also draft up a severance agreements for parting employees. There are many intricacies associated with a severance agreement and it may be worth having an attorney review yours before accepting as an employee may not want to give up their legal rights or may want to negotiate better severance terms.
Some of the more common perks in a severance package may include any or all of the following:
- Severance pay for a specified time.
- Continuation of health insurance and / or other benefits for an agreed upon period.
- Out-placement services.
The amount of severance packages is usually based off the length of employment with the company. The goal of the employer is often to prevent a possible lawsuit for any reason in exchange for a severance agreement. Meanwhile an employee’s goal is most likely to maximize on compensation and benefits they may be entitled to had their employment not been terminated. The ultimate goal for both parties, should be to reach a fair and equitable agreement while offering adequate protection for both parties.
An employee who is offered a severance package should be prepared to address the following:
Severance agreements may also contain a non-compete agreement restricting employees from in a similar industry within a certain mile radius over a specified period of time. Because non-compete agreement can greatly restrict an employee’s ability to find a new job, it is often one of the tools we like to use as leverage for negotiating a better agreement
Heitz & Bromberek has a vast experience in assisting clients in drafting, negotiating and reviewing severance agreements and is a leader in employment law in Naperville, IL. If you are in need of assistance in review or guidance in a severance agreement negotiation, contact us for more information.