Question:
Jennifer,
I am separating from an employee. Do I need a severance agreement?
Thanks,
Dr. K
Answer:
That depends, are you paying severance? If the answer is no, then no, you do not need one and you would not have "consideration" for one, which means even if signed, the document may not be enforceable. A severance agreement is recommended any time you are paying monies that are not owed at the time of a separation, and/or any time an employee may be looking to cause trouble after separation. In order for the severance agreement to be binding, or any contract for that matter, we need an offer, acceptance and consideration - give something to get something. So, once we decide on the severance, we can work on the severance agreement, which typically contains promises by the employee regarding terms of separation, and also should contain a "release", absolving the employer of any potential claims the employee may have against the employer. Each state has specific employment laws, rules and regulations that require specific mention or crafting for the release to apply. A severance agreement is not a "legal zoom" project, and should be thought through in advance, with the guidance of competent counsel. Along with the question of whether you deploy a severance agreement is whether or not you have properly documented or need to document support for termination...that's a separate question for another day...
For assistance with separations, contact me or Kieran directly.
