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2 risks to watch out for when negotiating a severance package

On Behalf of | May 27, 2022 | Employment Contracts |

As a highly-skilled or educated employee, you cannot just find a replacement job when your current position ends. It may require months of searching for you to find even one position that matches your skills and even longer for you to get a job that offers comparable pay and more responsibilities than your most recent position. 

Your severance package is your main form of protection against long-term unemployment and financial devastation following the end of one position. There are several ways that companies reduce the benefits you derive from a severance package, including the two common tricks below. 

The severance package ends your right to other compensation

If you should receive stock options or deferred pay as part of your employment agreement with the company, you may lose that future compensation even though you met the criteria to receive it if you accept the severance package they offer. 

A careful review of the initial agreement in your employment contract or the document they want you to sign when you accept their severance proposal can help you determine if you will have to leave other pay or benefits on the table. 

You might waive your right to file a lawsuit

Do you believe that your employer has violated your rights by terminating you or that they discriminated against you during your employment with the company? Before you accept a severance package and move on with your life, you may need to look at whether you waive your right to take legal action by accepting that compensation. 

Many companies include clauses in their severance agreements that prevent former employees from filing a civil lawsuit later. Reviewing the documents carefully when you first accept a position or when you are negotiating your exit from the company can help you avoid potential pitfalls hidden somewhere within the severance agreement the company wants you to sign.


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