Severance agreements are a common way for employers to part ways with employees. They can provide employees with financial assistance during a time of transition, and they can help employers to protect themselves from legal liability. However, employers can make mistakes when drafting and executing severance agreements. These mistakes can lead to lawsuits, financial losses, and other problems.
In this article, we will discuss some of the most common severance mistakes that employers make. We will also provide tips for avoiding these mistakes and drafting a fair and enforceable severance agreement.
Common Severance Mistakes
Here are some of the most common severance mistakes that employers make:
Mistake #1: Not providing enough severance pay.
When an employee is terminated, they may be entitled to severance pay. The amount of severance pay that an employee is entitled to depends on a number of factors, including the employee’s length of service, their salary, and the reason for their termination.
Employers should carefully consider the employee’s entitlement to severance pay when drafting a severance agreement. If the employer does not provide enough severance pay, the employee may be able to sue the employer for breach of contract.
Mistake #2: Waiving employee rights.
Severance agreements often include provisions that require the employee to waive certain rights, such as the right to sue the employer for wrongful termination. Employers should carefully consider the employee’s rights before agreeing to waive them in a severance agreement.
If an employer waives an employee’s right to sue for wrongful termination, the employee may be unable to recover damages if they are wrongfully terminated. This is a serious risk that employers should carefully consider before waiving employee rights in a severance agreement.
Mistake #3: Not disclosing all relevant information.
Severance agreements should disclose all relevant information to the employee, including the amount of severance pay, the employee’s rights, and the terms of the agreement. If the employer does not disclose all relevant information, the employee may be able to challenge the agreement in court.
Mistake #4: Not providing a reasonable time to review the agreement.
Employees should be given a reasonable time to review a severance agreement before they are required to sign it. If an employer does not give the employee enough time to review the agreement, the employee may be able to challenge the agreement in court.
Mistake #5: Not getting the employee’s signature.
A severance agreement is not valid unless it is signed by both the employer and the employee. If the employee does not sign the agreement, it is not enforceable.
Mistake #6: Not having the agreement reviewed by an attorney.
Employees should have their severance agreement reviewed by an attorney before they sign it. An attorney can help the employee understand the terms of the agreement and ensure that their rights are protected.
Mistake #7: Not following up after the employee signs the agreement.
After the employee signs the severance agreement, the employer should follow up to make sure that the employee understands the terms of the agreement and that they are satisfied with the agreement.
By avoiding these mistakes, employers can protect themselves from legal liability and ensure that severance agreements are fair and enforceable.