Severance Agreements

The general idea behind a severance agreement is that the employee agrees to take something of value to which he was not previously entitled—additional compensation, benefits, or other “in kind” consideration—in exchange for agreeing not to sue you.

Unfortunately, even a totally justified, squeaky-clean termination isn’t bulletproof 100% of the time. An employee determined enough to sue you will do so, and you’ll end up spending a good chunk of change defending even a meritless claim. That’s where the severance agreement comes in. A severance agreement that includes a full release of claims is the only way you can be reasonably sure you won’t be dealing with the individual again. Of course, peace of mind has a price.