Severance Agreements: What Employers Should Know
Trading severance pay for a release of claims — and getting the release to stick.
What is a severance agreement?
A severance agreement is a contract in which an employer provides pay or benefits to a departing employee in exchange for the employee's release of legal claims against the company. It gives the employee a financial bridge and gives the employer certainty that the separation is final.
Why employers use them
The real value to an employer is the release: a properly drafted severance agreement resolves potential wrongful-termination, discrimination, and wage claims before they can be filed. It converts an uncertain risk into a known, one-time cost.
Making the release enforceable
For the release to hold up, the agreement generally must offer real consideration, be clear about the claims released, and be entered knowingly and voluntarily. Special rules apply when releasing age-discrimination claims for older workers, including required review periods — so the mechanics matter as much as the dollar amount.
How Nochumson P.C. helps
Nochumson P.C. drafts enforceable severance and separation agreements for employers. Contact us before you offer severance.
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