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Be aware of severance agreements

Terminating an employee is distressing for the worker and may pose legal risks for employers. Separation packages or employment contracts often contain severance agreements intended to protect employers. Workers should be prepared to negotiate a fair and reasonable resolution.

A severance agreement is usually optional unless the original employment contract required one. An employer may be sued for breach of contract if they do not honor a severance agreement that was contained in the employment contract.

In return for some benefits to the worker, employers offer these agreements to avoid wrongful termination or other lawsuits, protect trade secrets or to preserve their reputations. Workers should negotiate for greater concessions and should be wary of giving away important rights and benefits, such as unemployment compensation benefits.

Employers may also seek other things, such as a non-competition agreement that temporarily prevents an employer from taking customers from them, working for competitors, or starting their own similar business in a certain geographical radius. These agreements can prohibit an employee from trying to convince other employees from leaving that employer and a non-disparagement agreement preventing the worker from making negative remarks about the business or why they left their job.

In return for their concessions, employees may seek severance payments based upon their years of employment or other factors, continuation of health care benefits, keeping employer-provided property and even references or letters of recommendation. Agreements may be tailored for a worker's specific needs.

An attorney can help advise workers on what is customary and reasonable and assure that the agreement complies with Pennsylvania law, especially on non-competition agreements. A worker may lose important rights and concessions if an attorney does not review these agreements and participate in negotiations.

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