Negotiating a Severance Package

A severance package is an agreement between an employee and a former employer itemizing the benefits and pay associated with the employee’s termination. You may have been offered such a package if you have been fired or laid off from your job. Unfortunately, many terminated employees are never offered a package and may not even realize that they can receive severance benefits. Others may not know that they have the right to ask for such an agreement, even if it is not offered to them. It is important that you fully understand the terms of the contract that you are entering into to ensure you receive the benefits you’re due. Listed below are some significant things to keep in mind before you agree to sign any contracts with your former


If you have a pension it should be properly addressed in your severance agreement. Employee Retirement Income Security Act of 1974 (ERISA) is a law that governs pensions. Make sure you are not giving up benefits under your pension plan based on a lack of understanding of pension laws.


You most likely have insurance through your employer. COBRA is a type of insurance that fills the gap that is created in your insurance benefits after termination. Many employers will pay for most or all of the expenses incurred by the need for COBRA insurance. Understanding how your insurance benefits will change, what your responsibilities will be, and what will be paid by the company should be outlined in your severance package.


If you have stock options, you must be sure that the agreement you have been presented with is not making you give up valuable stock appreciation rights. Some companies will terminate an employee just as they are about to be fully vested in the company. If you feel that you were let go to keep you from vesting, you may have a legal claim against your employer.

Non-Compete Agreement:

If a non-compete agreement is involved in your severance, it can interfere with your ability to get another job. You really need to understand your limitations before you sign. You could be forfeiting your defenses to the non-competition provisions. If the time involved in this agreement is longer than the number of weeks of severance pay, the agreement is probably not worth being signed.


To ensure that you are not being discriminated against, it is in your best interest to take a closer look as to why you were let go in the first place. Did you report to a supervisor that you had been sexually harassed by a co-worker? Did you recently take a leave of absence due to bereavement, sickness, or disability? Maybe you feel that your age was a factor in your termination. If you think you have been a victim of discrimination by your employer, not only do you have legal rights, but this also may give you leverage to negotiate a severance package if one is not offered.

If you have been terminated and did not receive severance benefits, or know you will be receiving a severance package in the near future, it is important that you take the time to thoroughly read the documents and understand what exactly the terms are that you are agreeing to. Having an attorney review your documents will ensure you are not giving up any valuable assets. Scott Gilmore Thompson can carefully go through these documents with you and help you negotiate the benefits you deserve. Contact Matt Scott today for help with reviewing your Severance Package details and information.