What to Expect When Signing a Severance Agreement

Table Of Contents

What Happens When You Sign a Severance Agreement?

What happens when you sign a severance agreement is you formally accept the terms of your employment separation. You relinquish specific legal claims against your former employer. The severance agreement defines your post-employment obligations. You receive the specified severance benefits in return for your signature.
The severance agreement becomes a legally binding contract upon signing. Both parties must adhere to the contract’s provisions. You cannot pursue claims you waived in the severance agreement. Your employer must provide the agreed-upon compensation and benefits. Signing a severance agreement finalises your employment termination.

What Documents Do You Sign with a Severance Agreement?

What documents do you sign with a severance agreement? You sign the severance agreement document. You sign related documents with a severance agreement. Related documents include a release of claims form. You sign a non-disclosure agreement. You sign a non-compete clause.
You typically sign an acknowledgment of receipt for company property. You return company property at the time of signing. You may sign a document outlining your COBRA rights. You receive copies of all signed documents for your records. The signing process makes sure all necessary paperwork is complete.

How Do Severance Payments Arrive?

Severance payments arrive through various methods outlined in the agreement. Your employer typically provides severance as a lump sum payment. Your employer might issue payments in instalments over a period. The severance agreement specifies the payment schedule.
The severance agreement details the payment method. Payments often arrive via direct deposit into your bank account. Your employer might send a cheque by post. All severance payments are subject to applicable taxes. You receive a statement detailing tax deductions.

What About Continued Benefits After Signing?

Continued benefits after signing often include health insurance coverage. Your employer typically extends your health insurance for a set period. The severance agreement specifies the duration of benefit continuation. You usually pay for the continued health insurance coverage.
You may have the option to continue other benefits. These benefits include life insurance or disability coverage. The terms for continuing these benefits are in the severance agreement. You must elect to continue these benefits within specific timeframes. Your employer provides information on COBRA options.

What Are Your Obligations After Signing?

Your obligations after signing include adhering to confidentiality clauses. You must protect your former employer’s proprietary information. The severance agreement typically restricts you from discussing the terms. You cannot disclose the severance amount to others.
You must honour any non-compete agreements. You cannot work for a competing business for a specified period. You must also abide by non-solicitation clauses. You cannot solicit your former employer's clients or employees. Your adherence to these obligations protects your severance benefits.

Why Do Severance Agreements Include Non-Disparagement Clauses?

Why do severance agreements include non-disparagement clauses? Severance agreements include non-disparagement clauses to protect the employer's reputation. The non-disparagement clause prevents an employee from making negative statements about the company. An employee cannot criticise the employer, the employer's products, or the employer's services. The non-disparagement clause applies to public forums and private forums.
The non-disparagement clause safeguards the employer's brand image. Negative comments harm business relationships. The clause mitigates potential financial losses for the employer. Violating a non-disparagement clause results in loss of severance. Violation also leads to legal action against the employee.

FAQS

What happens if I do not sign the severance agreement?

What happens if I do not sign the severance agreement? You do not receive the severance benefits. You retain your right to pursue legal claims against your employer. The employer typically withdraws the severance offer after a specified period.

How long do I have to review a severance agreement before signing?

You have a reasonable period to review a severance agreement before signing. The law often mandates at least 21 days for employees over 40. You get seven days to revoke your signature after signing.

Can I change my mind after signing a severance agreement?

You can change your mind after signing a severance agreement within a specific revocation period. The revocation period is typically seven days. You must notify your employer in writing within this timeframe.

Will signing affect my ability to get unemployment benefits?

Signing a severance agreement typically does not affect your ability to get unemployment benefits. Unemployment eligibility depends on the reason for your separation. Severance pay does not usually disqualify you from unemployment.

What happens if my employer breaches the severance agreement?

What happens if an employer breaches a severance agreement? An employer breaches a severance agreement. An employee pursues legal action. An employee sues the employer for breach of contract. The employer fulfils the employer's obligations under the agreement.

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