Severance Package for Terminated Employees
A job looker’s foremost consideration is to look for a job and keep it. Most employees do not seem to think that at some point in their lives they will have to leave their employer and look for another one.
Experience warns most people that significant proportion of employees who will someday leave will be leaving in more or less unfriendly circumstances.
To avoid being left in the dark and having an unsecured future, as early as the job interview, an applicant must negotiate for a severance package.
The best time to negotiate an employment severance package or "separation agreement" is before you accept that new position. Otherwise, it would be too late to iron out things that are no longer effective and difficult to realize.
This article tackles some of the important matters to consider when confronted with this matter.
Inclusions in the Severance Agreement
The benefits obtainable in case of termination are highly dependent upon various considerations such as the status of the employee, the size and condition of the company and the circumstances surrounding the termination of employment.
Regarding severance pay, the benefit is calculated in terms of time. For starters, it pertains to a certain number of weeks or months of base salary.
Some of the considerations in paying severance pay are:
- length of the employee's service to the company
- amount of time required to permit the employee to find an equivalent position without suffering economic hardship
The agreement should also specify if bonuses or commissions constitute a significant part of one's compensation.
Stock option or restricted stock grants deserve significant consideration as well. The agreement should answer how the termination of employment will influence vesting expectations or the length of time remaining to exercise vested shares.
Some severance package profitably focuses more on modifications to the stock options or restricted stock rights than on cash considerations.
Other factors worth considering include:
- payment for accrued but unused vacation leaves
- renegotiating or eliminating any preexisting non-compete or non-solicitation agreements
- agreeing upon the character of termination and providing for pre-agreed employment references
- keeping possession of any office business equipment
- returning business expenses
- renegotiating or limiting the impact of preexisting confidentiality provisions
Examine your Legal Rights
If you have been terminated and you want to determine if you get a fair and reasonable severance package, you have to assess your rights.
To begin your evaluation, hire a lawyer. By doing so, it will be easier to assess all grounds you may have to challenge your termination.
Locate any document relating to your job such as offer letter, employee welcome package, employee handbook, e-mail and any materials relating to the modification of your responsibilities or compensation.
If you have signed an employment contract, chances are all rights and benefits relating to your employment are embodied in such contract.
The documents you collect and review will indicate the kind of employment you have – “at will” or not.
An employment "at-will" means you can be terminated for any whimsical or capricious reason for as long as it is legal under the applicable law.
Determine also whether you have been discriminated against or required to work in an inappropriate environment.
Think, as objective as possible, for any claims of grievance you might have, to determine whether there is a legal basis for complaint. It is because not all acts are actionable wrong.