How Do You Know If Your Severance Package Is Fair?

When the time comes to part ways with your employer due to no fault of your own, you will be entitled to severance, an amount of money to make you whole due to the loss of your employment.  Severance is governed by employment contract, the common law and statute, with facts such as your age, position held, length of service, reason for the termination factor into the equation. Depending on the type of position you held and in what industry it can be a complicated question determining entitlement.

This leads to the obvious question: how can I tell if my severance fair?

Is My Severance Package Fair?

So how do you know if you’re being offered fair severance? The starting point for this, as with almost everything in employees law, is the employment agreement.

Is there a written employment agreement? If so is it enforceable? If there is not a written employment agreement, what are the implied terms of your employment agreement? These questions need to be answered in order to determine your entitlement.  Employment agreements can be used to limit your entitlements under common law. However, if your employment agreement attempts to limit your legislative entitlements that could render the employment agreement unenforceable.

An experienced employment lawyer will be able to examine your employment agreement and the employment relationship to advise you as to the monetary severance you are entitled to at law.

Restrictive Clauses in Severance Packages

Many severance packages include restrictive terms, such as non-competition clauses which restrict your ability to compete with your employer in the same industry, usually for a set period of time and within a set geographical boundary.

There are also often, depending on the type of work you did, non-solicitation clauses, which limit your ability to solicit any people or businesses which you had relationships with flowing out of your former employment for any future business within the same or similar industry. As with non-competition clauses, these clauses are usually applicable for a set period of time.

Another common restrictive clause that pops up in severance packages are confidentiality clauses. These clauses are designed to lee you from talking about the inner workings of your former employer and any of the work you did while employed there.

Restrictive clauses are a common way for employers to protect their interests, especially when they have a large workforce. Whether or not you should accept the restrictions proposed by your former employer in your severance package comes down to two considerations:

  1. are you legally obliged to accept them; and
  2. Is there a reason not to agree to them?

You may be obligated by your employment agreement to accept the restrictive clauses of your severance package, however if not, the question becomes more practical: is there any reason not to agree to them?  If not, then acceptance may be used to leverage a better deal for other parts of your severance package. Alternatively, if not legally required to accept you could also negotiate the exact terms of the restrictions to ensure they work for your future plans.

Experienced Employment Lawyers

If you’ve been offered a severance package it can often be well worth your time to get the advice of an experienced employment lawyer. They will be able to navigate the legislative and contractual legal implications and help make sure you get a fair deal.

Contact the employment lawyers at Taylor & Blair LLP if you need a severance package reviewed today.