Releasing Legal Claims Through a Severance Agreement

The financial impact of leaving a lucrative job can have significant and detrimental effects on the life of a DC-area executive. When a person in a position of power is asked to step down from their role within an organization, or is terminated from their employment, they may be eligible for a severance package from their employer. The terms of a severance package can often be negotiated by the employee and their company.

However, it is important that individuals in this challenging position realize that severance packages and agreements are generally not offered as no strings attached. Individuals give something up when they sign and accept, and before they do, they should understand how their futures may be impacted. This post does not offer any legal advice on the topic of executive compensation or severance packages. It encourages those dealing with this legal dilemma to seek out knowledgeable counsel from trusted employment law attorneys.

What an Employee Gives up Through a Severance Package

Severance packages are based on agreements, and individuals and their employers may craft their contracts as they see fit. Therefore, different severance packages may be based on differently worded contractual terms.

Generally, though, employees who receive severance packages waive some rights through their acceptance of the contracts and consideration. They may agree to waive legal claims they have against their employers for discrimination or other work-based claims. They may waive other rights to seek compensation in the future for past worked performed.

Severance packages are generally not offered for nothing. Before an employee accepts one, they should know what they will forego to secure it.

Additional Considerations on Severance Packages

Severance packages and their attached agreements often terminate the legal and financial relationships between employees and their employers. Though employees may negotiate benefits and health insurance into their severance packages, the agreement to compensate an employee when they are let go from their job is often the end of their ongoing interactions. As such, before employees sign their severance agreements, they should ensure that they are being adequately compensated for what they are releasing. An employment and benefits law attorney can counsel such an individual on how best to protect themselves and their future.


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