Drafting Severance Agreements

The company has considerable discretion in determining the amount of severance pay to be made available, but there are some important considerations: this means that you should (read: must) have a separate paragraph as part of your severance agreement, which goes beyond the employee`s rights, including that he can challenge their termination by filing a right. This is an important section to go with your legal team. When workers receive severance agreements before their last work date (s), employers are often in a hurry to get the worker`s signature in the agreement before the last employment date. It is likely that employers want a solution of some kind in these situations. Third, severance agreements also give the employer the opportunity to link outgoing workers to new restrictive agreements after they are completed. In the past, companies have relied on the Equal Opportunity for Employment Opportunity (EEOC) guidelines. If you include a release of rights in the severance agreement and the employee has forty (40) or more and you include a release from age discrimination in employment («ADEA»), he must comply with the Elderly Workers Protection Act («OWBPA»). With respect to other considerations, the employer should ensure that the worker has sufficient time to review the severance package. When a staff member decides that he or she wishes to pursue a dispute and attempts to invalidate the agreement. In general, an employer should ensure that the worker is not put under pressure to sign the agreement and to hear the corresponding rights and legal provisions. A good way to do this is to confirm whether or not the employee has received legal advice.

Employers should also ensure that OWBPA regulations prohibit employers from imposing a penalty on workers if they challenge the validity of an unlocking agreement. The ineligible penalties contained in the unlocking contracts may include provisions that require employees to recover the consideration received when a worker files an action challenging the validity of the release contract or a provision requiring employees to pay legal fees and/or damages to employers following the filing of an ADEA action. 29 C.F.R. No 1625.23 (b). (However, note that if a staff member successfully challenges the validity of the agreement and prevails in the merits of an ADEA action, a court of law must revalue any consideration paid to the employee as part of the release agreement against all damages awarded in the course of the subsequent action. A lump sum payment compared to ongoing payments, which are often paid through the payslip; Or Practical Tip: Severance pay or plans that require severance pay should also require the former employee to sign an release contract in exchange for severance pay.