Severance Agreements

So, you've decided to fire your problem employee. What happens now? Well, besides officially letting them know you have terminated them, you will now need to negotiate severance agreements. Keep in mind that this is an area where the former employee can take advantage of you. It helps to know what you must do for severance agreements and what is optional. Remember every situation is different. Even though some offerings like severance pay are not necessary, they make the termination process go much smoother.

Consider Why You Are Firing Them

The types of severance agreements you may offer your employee will have a lot to do with the grounds for termination. If you lay them off due to a company restructuring, they will leave on better terms than if you fire them for violating company policy. The reasons will affect the types of severance agreements you will negotiate. No laws require you to offer severance pay. However, you may choose to if the termination had nothing to do with the employee's performance.

Severance Agreements Basics

To develop the best package of severance agreements, it helps to hire a lawyer. Severance packages are legal documents and it may take a specialist to get the jargon correct. Each company has its own policies on severance agreements. Some offer severance pay, others offer other benefits, and still others will only allow a former employee to get severance if they promise not to sue the company.

When you are working with the lawyer, it helps if you have a clear idea of what you want to include in the severance package. Do you want to offer a benefits package and a certain percentage of pay? It is also a good idea to outline who will be eligible for the severance plan. You can specify a clause that if an employee is terminated for certain reasons, than they will not be eligible for any severance benefits.

Understand Where You Stand

Your attorney will help you understand the legal implications of the severance plan that you have in place. Even if you have a standard written package, using it to fire specific employees can get complicated. Before offering a terminated employee any severance agreements, contact your lawyers or legal department to get advice on how to proceed. It may help to have them present at the termination meeting.

Why Have a Severance Plan?

There are a few benefits to having a severance plan. First, it helps alleviate any harsh feelings your terminated employee has toward the company. A severance plan gives them an opportunity to search for a job while still getting paid. That way, they can still provide for their families. It helps foster a sense of goodwill that will help the overall moral of the company.