5 Steps To Take When Offered a Severance/Separation Package

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Minnesota Employment Law Attorney

Have you ever been offered a severance or separation package? If so, you probably know how this can be devastating and especially when you’ve been at a company for many years. When this occurs, it’s critical that you stay calm and make the right choices even if your employer is pressuring you to sign the agreement. Here are five basic steps to take when you’re offered a severance or separation package.

1. Review the Agreement

Carefully review all the details in the package, determining if it omits benefits, insurance and other sources of compensation. Furthermore, compare it to other standard severance offers in your industry. Check the payment schedule to see if you’ll be given a lump sum payment or receive payments over time. Moreover, ensure you understand when to expect your payment(s).

2. Decide the Reason for Being Fired

Do you know why you’re being terminated? Some of the main reasons for being fired include illnesses causing absenteeism, whistle blowing and poor work performance. Maybe you’re being laid off because of your age, gender or ethnicity. If you think you may be a victim of discrimination, retaliation or harassment, contact an experienced and highly skilled attorney who can go over the contract with you.

3. Collect All Your Employee Information

Gather pertinent employee information so that you can decide if you have grounds to negotiate. These include items, such as an employment manual, an original offer letter, your company’s severance plan, vacation time, health and disability insurance and other documents.

4. Determine Whether or Not to Negotiate

In most cases, severance packages are negotiable although sometimes it can be risky to do so. Whether or not to negotiate usually depends on if the severance package is reasonable or if it isn’t fair.

If you do decide to negotiate, determine what needs to be negotiated. Even though you may be more concerned about dollar amounts, such as stock options, there are probably other features of your severance package. For instance, there could be disability benefits that could be negotiated. Also, you may want to think about asking your employer to give you reference letters stating that you voluntarily left rather than being laid off.

5. Hire an Attorney

To be safe, hire an attorney. When you’ve been laid off from a job, it’s easy to not think objectively, which can mean suffering even more financial loss. That’s why it’s a good idea to let a qualified employment lawyer examine your severance package to see if you need to negotiate. Consider how the decision to accept, negotiate or reject a severance contact can have a huge effect on your finances.

Severance Packages vs. Separation Packages

Although a severance package is sometimes considered the same as a separation package, they’re not quite the same.

  • Severance packages are offered when employees lose their jobs. In most situations, it offers them a lump sum payment, along with other perks.
  • On the other hand, a separation agreement entails employers trying to persuade their employees to voluntarily leave their jobs. An example is an employer offering early retirement to an employee that includes a cash payment and other benefits.

Other Considerations and Warnings

  • Don’t rush in deciding as whether to accept or reject an agreement. Take enough time to examine the package as well as negotiate or get legal counsel. Consider that under Minnesota law, you have 21 days to review a severance agreement.
  • Virtually all severance agreements contain several conditions, so be sure to read and know what they mean before you agree to them to avoid giving up your rights. This is another reason for hiring an attorney to help you.
  • Before signing a contract, check to ensure you’ve been paid for all expenses that your company owes you. If your employer does owe you money, set a specific date for being reimbursed for business costs.
  • If your company is struggling financially, you may not be able to ask for more money than what you were offered. However, ask if you can get some insurance benefits instead of more severance pay.
  • Go over the agreement to see if there’s mutual language, regarding confidentiality and non-disparagement. In other words, if your employer requires that you don’t speak negatively about it, you may make the requirement that your employer do likewise. Consider how non-disparagement is essential in protecting your reputation.

The Bottom Line

  • Severance offers can be either a good or a bad thing.
  • Even in bad situations, there can still be options and especially in cases of discrimination or retaliation that violated a contract.
  • When in doubt as to what to do, don’t hesitate to hire a highly qualified and experienced employment attorney who can help you evaluate all your options.

Questions? Call the legal pros at Villaume & Schiek. Please contact us for a free consolation.


Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individualsituation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.