In an economy where many people are afraid of layoffs, a good severance agreement can help cushion the blow. Although not every company has a formal severance policy, most have at least an informal policy. Sometimes the severance package will be included in the employment agreement or in the offer letter. Other times a company will not mention the subject until the worker’s employment with the company is terminated. If an offer letter or employment agreement does not include a severance package, an employee can ask what the company's termination policy is before signing on. The company may respond by revising the employee agreement to include a severance package. In any case, it does not hurt the employee to ask the question at that stage. Our Chicago severance agreement lawyers can advise you on any matters that may arise during this process.
Severance agreements were originally put in place to protect the newly unemployed, particularly those whose employment is terminated without cause. "Without cause" means that the employee did not fail to fulfill the duties of the position or fall short of the company's requirements of conduct in any way. Rather, a termination without cause could be a layoff for budgetary reasons or as a result of a merger. If a severance package is not included when the employee is first hired, the employee can broach the subject at the time of termination. If the termination is without cause, the employee has a much higher likelihood of being able to negotiate for a severance package with better terms.
The size of a severance package varies greatly, mostly depending upon the employee's status. For an employee working as a manager or in a lower position, a minimum of one to two weeks of base salary is standard. Sometimes the employee can negotiate for an additional week of base salary for each year that she worked for the company. For an employee at a director level, three to six months of base salary is a fairly standard severance package. Any type of vice president can usually expect six to twelve months of their base salary. In addition to salary, any of these employees might also get extended healthcare benefits, usually through COBRA, and sometimes 401(k) benefits.
A company might require an employee to sign a waiver surrendering all of her rights to sue the company as a requirement of the severance package. In the event that the employee violates this waiver, she would probably be required to return whatever was given to her as part of the severance package. The severance agreement attorneys at our Chicago firm can help you draft or enforce a waiver as needed.
Employees negotiating a severance package should consider what their priorities are. If a worker thinks that she has a strong case against her former employer, she might decide to forgo the severance package in favor of a lawsuit. Others might prefer the certainty of the money that they can receive immediately from the severance package.
For some, making sure they leave their former employer on good terms is most important. An employee might be able to negotiate a favorable letter of recommendation from her former employer as part of a settlement package. This would help the employee feel more comfortable about leaving the position as it increases the likelihood that they will be able to find a new job.
The Chicago severance agreement attorneys at Lubin Austermuehle, P.C. have decades of experience handling severance agreements. Whether you are just starting a new position, or anticipating termination, it never hurts to consult a knowledgeable attorney concerning a severance package. With offices in Oak Brook Terrace and Chicago, Illinois, we have represented employees all over the country. To consult with an experienced severance agreement lawyer in Chicago today, you can email us online or give us a call at (833) 306-4933.