Negotiation of Severance Packages

Know Your Severance Package Rights

Due to a number of reasons, employers often terminate work agreements with employees of a business. Whether it is because of an employee’s poor performance, corporate restructuring, or merely not enough work, there are a variety of legal reasons why an employer may end a work agreement with an employee. However, there may also be an illegal reason as the basis for a termination such as race, religion, or gender.

Upon being notified of termination, the company may offer a voluntary severance package. Severance packages are usually comprised of a payment that is calculated by the employee’s typical paycheck for a certain length of time. While the package includes compensation provided to a terminated employee, it often comes at a cost. The employee may be required to waive his or her right to sue the employer by accepting a severance package. An employee who is negotiating a severance package should consider a number of things. An experienced Tennessee employment lawyer from The Higgins Firm can be a great asset during the negotiation process.

Important Things to Know About Tennessee Severance Packages

There are a number of things that a terminated employee should know before negotiating a severance package. Some of these things may include but are not limited to:

  • The employee gives up his or her right to file a lawsuit against the employer by accepting a severance package in most cases.
  • Severance packages or agreements can include a non-competition clause or non-solicitation agreement which may restrict the type of work performed for a period of time.
  • A severance agreement may not be enforceable if the employer did not give the employee time to review the agreement.
  • Typically, the employee has the right to review a proposed severance agreement with a Tennessee attorney. If the employee is over 40 years old, this condition is always true.
Important Negotiation Issues to Consider

Because severance packages are voluntary agreements between an employer and a terminated employee, nearly any aspect of the package can be fair game for negotiation. Health insurance payments, pay for unused vacation or sick days, and other areas are all issues ripe for negotiation. Although any issues may be negotiated, asking for too much may cause the employer to pull an offer from the negotiation table. An experienced attorney can provide extremely valuable advice during the negotiation process by avoiding certain critical errors that an inexperienced negotiator may make.

One issue that a terminated employee will want to consider is the final payment method. An employee may have the option of choosing either a lump sum or payments that extend over a period of time. The employee should think about whether one large payment would be better or whether the employee would be comfortable with a limited salary for an extended period. Another issue the employee should consider is how certain bonuses, incentive payments, or commissions will be included in a severance package. In addition, negotiating a positive recommendation to future employers from the previous employer can be very beneficial upon finding a new position.

The Experienced Employment Lawyers at The Higgins Firm Can Help You

If you have been offered a severance package as a result of termination, we encourage you to contact The Higgins Firm as soon as possible. Our experienced Tennessee employment attorneys can help you through the negotiation process to ensure that you receive the best severance package possible for your particular situation.