The topic of severance agreements might invoke various associations among Prince George’s County employees. Some might regard the term as a euphemism for getting fired. Others, given the recent economic recession, might have heard the term used in the context of reductions in force or layoffs.
What might surprise readers, however, is that severance agreements might work to the advantage of both employees and employers, provided a proactive approach is taken. A suggested best practice is to include severance terms in an employment agreement, or as a separate document in the employment offer bundle.
Terms commonly addressed by severance agreements may include grounds for termination, such as whether cause is required. The issue of cause may be of particular interest to residents in Annapolis and Greenbelt, as many federal government employees live in these suburbs and commute to their places of employment.
In the government sector, regulations often expressly define the procedures that a supervisor must follow before terminating an employee. Employee protections in that context might include a safe harbor, such as a ten-day letter, a prerequisite performance improvement plan period, or perhaps arbitration or appeal options.
Private sector employees may have more latitude over termination decisions, but defining that discretion up front may avoid prolonged employment litigation alleging wrongful termination. A company may also publish a best practices document that clarifies potential areas of dispute.
Finally, severance agreements also define matters of compensation and potential non-compete agreements. In the private sector, line employees might receive severance payouts for one or two weeks, perhaps multiplied by a factor to reflect length of service.
Source: foxbusiness.com, “How to Negotiate a Severance Agreement,” Stacey Hawley, May 21, 2013