When entering into a relationship with a new employer, it is not uncommon for both parties to include a severance package as part of the employment contract. A severance package can be beneficial to both parties, but it is important for an employee to understand what goes into the agreement and what rights might be taken away when signing the new contract.
A severance package can provide some comfort and protection for an employee who is fired or let go. In addition to including a monetary award following the employee’s termination, severance packages may also include additional benefits, such as an extension of health benefits or a pension. But, severance packages are also designed to protect the employer.
It is not uncommon for severance packages to include several agreements which may limit an ex-employee from finding work elsewhere. A non-disclosure agreement assures the ex-employer that the ex-employee will not disclose information to a company’s competitor that might give them an advantage in the industry, such as sharing trade secrets or customer lists. The severance package may even include a non-compete clause, which prohibits the ex-employee from working in the same field or industry for a certain amount of time.
It is in an employee’s best interest to have a full understanding of employment contracts before committing to the terms. Doing so may also prevent employment litigation in the event of a wrongful termination. Getting more information about employment law may be a good idea for New York residents who are about to sign a new contract or who are in a dispute with an employer over a current contract.
Source: findlaw.com, “Severance Packages: Are Benefits, Severance Pay on the Table?“, Accessed on Nov. 29, 2016