Losing a job may terminate a worker's only source of income and important benefits, such as heath care. Some workers, especially those in senior positions, may be offered a severance package with continued payment of salary for a time, stock options, job-search assistance and other benefits. When employment contracts may not contain the terms of these packages, employers may offer severance agreements which contain employee benefits in return for the surrender of important rights.
Employees subject to lay-offs and other terminations are dealing with a multitude of emotions and insecurity while promptly clearing out their desk. During this stressful event, and even earlier in companies that are restructuring or engaged in layoffs, employees should consider the contents of severance agreements.
Recently, major corporations such as General Motors, Verizon and Pfizer have announced employee buyouts for the end of this year. These buyouts illustrate the emotional and financial considerations that accompany their decision to enter severance agreements.
CBS CEO Les Moonves resigned on Sept. 9 after numerous sexual harassment allegations. Despite these serious charges, he may leave the network with a $120 million severance package. It is reported that CBS will donate $20 million of his financial settlement to organizations that support the #MeToo movement. His departure also provides important lessons about the importance of severance agreements.