Separation and Severance Agreements

What is it?

A separation or severance agreement is a contract between an employer and an employee that lays out rights and responsibilities concerning the end of the employment relationship.  Many employers offer these agreements to remove the uncertainty about legal liability for firing or laying off an employee.  This is particularly true for employees over 40 years old, but also applies in many other termination circumstances.  These agreements are sometimes also called a “Release.” Employees 40 years and older have specific rights when entering into such an agreement.  Because of these rights, the release of potential legal claims, and potential ramifications for unemployment compensation, an employee should consult with an employment attorney before entering into such an important agreement.

What is the consequence?

A separation or severance agreement usually covers such things as:

  • Compensation beyond what an employee is already entitled to (such as wages or benefits owed)
  • A release of all known and unknown employment-related claims the employee may have against the employer
  • Promises to keep the agreement confidential
  • Continuation of health benefits
  • Reference and recommendation for new employment
  • Whether the employer will fight the employee’s application for unemployment compensation
  • A separation or severance agreement can affect whether an employee receives unemployment compensation.  For example, an employee may have to wait to receive unemployment depending upon the amount of compensation received as part of the agreement.  Because of this and other  consequences of these agreements, Triquetra Law strongly encourages employees to seek representation before signing such an agreement and applying for unemployment compensation.

For more information and help with separation and severance agreements, contact Triquetra Law at: 717-299-6300.