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What is a severance agreement?

On Behalf of | Mar 17, 2022 | Contract Law

No matter the circumstances, getting let go from a job is never easy. Some Texas employers try to make the process easier by asking terminated employees to sign a severance agreement. Before you sign anything, it may be in your best interest to have an attorney specializing in contract design, negotiation, and execution to review your agreement and ensure that your rights are protected.

What is included in a severance agreement?

The specifics of a severance agreement will depend on your employer, but there are several provisions that may be included. Some of these provisions address:

  • Competition restrictions: A non-competition clause can legally prohibit you from working for your former employer’s competitor within the vicinity for a certain number of months. If you violate the clause, you could get sued by your former employer or lose your severance.
  • Solicitation restrictions: A non-solicitation clause could prevent you from attempting to convince coworkers or customers of your former employer to follow you to your new company.
  • Severance payment: Your agreement will address how much severance will be paid and how it will be paid (installment or lump sum). Generally, it is advised to request a lump sum.
  • Re-hiring potential/disparaging remarks: A non-disparagement clause can restrict you from speaking poorly about your former company. However, you can also request that your company is not allowed to speak badly about you as well, as it may affect your chances of getting re-hired.
  • Filing for unemployment: Your agreement may restrict you from applying for unemployment if it says that you resigned or were fired.

No matter the circumstances, getting let go from a job is never easy. You may be tempted to quickly sign anything your former employer asks you to just to be able to move on with your life. However, signing a severance agreement without understanding the consequences may be a terrible mistake. A business law attorney can help you negotiate an agreement that works for you.