SEVERANCE AGREEMENTS - TWO IMPORTANT POINTS
A severance package is designed to ease your transition out of the company. Your employer wants to make sure you leave quietly and you want to obtain a cushion to hold yourself over until you find a new job. The points below are important to anyone trying to evaluate their severance agreement.
1. Understand the Quid Pro Quo
The quid pro quo of a contract is the heart of the deal – the exchange of value. In reviewing your severance package, you need to understand what you are getting and what you are giving up. In most severance packages, you will be receiving a payment of money, possibly some health care coverage, stock options, and other things of value in exchange for your promise to leave the company and waive your right to sue them for anything or say anything bad about them. That is usually the quid pro quo of a severance package. Make sure you understand exactly what you are getting and what you are giving up.
2. The Money
Most every severance package contains a promise to pay money. Typically, the money is paid out as salary over a period of time. For example, your severance agreement might say that you will receive your salary for three months after your last day in the office. The money component of a severance agreement is almost always discussed in terms or weeks or months of a person’s salary. Be sure to check your agreement so you understand how much money is being paid to you. Remember, you can always ask for more money. If your severance package states that you will receive three additional months of salary after you leave, you can always ask them to increase the offer from three months to six months. You don’t need a reason for asking for more. But if the company asks why you want more money, you can say that you need more because you expect that it will take you more time to find a job.
