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Understanding the Basics of Severance Packages

You should consider hiring an experienced employment lawyer if your employer offers you a severance agreement in exchange for you leaving your job and waiving all legal claims you have against your employer.  Severance packages are often tedious and long, and you are not alone if you are unsure if you should sign, what you should sign, or about the details of the plan.

Understanding the basics of severance pay and severance packages is key to protecting your rights, and ensuring you receive what you deserve from your employer.

Severance Pay Explained

Employers may offer severance pay  to an employee in connection with an employment termination. Employers calculate severance pay  on several factors, including the length of a person’s employment and the employee’s pay level.  The amount of severance pay an employer offers varies from one company to another.

Severance agreements control the terms under which an employee leaves a job and exits the company.  These agreements specifically detail the  severance pay and benefits the employee will receive. If you sign a severance agreement, you will also promise that you will not file a lawsuit against the company for any legal claim that you may have regarding your employment such as wrongful termination, harassment, or unpaid work time.

The employment laws do not require that employers offer severance pay.  Thus, you should carefully review any severance agreement you receive from any employer.

What’s Included in a Severance Package?

The specific terms of your severance package vary based on the company where you work. Generally, severance agreements will contain:

  • Severance Formula. This is used for calculating the payout you will receive for your severance. Some employers use a formula that rely on how many years the employer has employed you.
  • Commission, Bonus, and Vacation. Some companies offer compensation for unused vacation time. Also, review any information regarding bonuses and commission you are owed.
  • Additional Terms. Severance packages often include a continuation of specific benefits like life or health insurance for a defined time period.

For many, knowing what happens to your health insurance is a serious concern. According to the COBRA law – Consolidated Omnibus Budget Reconciliation Act – terminated employees can continue with their medical insurance with the company for a set amount of time if they personally pay the full insurance premium.  This is often very expensive so you should consider this expense before you sign any severance agreement.

You Deserve to Have Someone Fight for Your Rights

When you are let go from your company, it can be a difficult and overwhelming situation for you and your family. You do not have to deal with this alone. Instead, you can contact an experienced employee rights law firm to ensure you receive everything you deserve.

You should contact an attorney if you have received a severance agreement. Remember, these documents are designed to ensure you do not sue your employer. An attorney can help you determine if your severance agreement is fair and if it is an agreement you should sign. Put simply, you need to know your options and rights, and an attorney can help with this. Contact RM Legal today.