Executive Separation Agreements & Severance Packages

Unless you have a contract of employment with a specific term of employment, employers typically do not have an obligation to provide a Separation Agreement or severance pay. Generally, however, an executive employee holding a high or mid-level management position will be asked by many employers to sign a Separation Agreement, which usually includes a general release of the employee’s claims against the employer as well as additional provisions, including confidentiality and protection of the employer’s proprietary information.

Particularly with the termination of executives and managers, it is important to understand the types of rights you are being asked to release as well as the extent of the confidentiality and other obligations.  Additionally, employers sometimes seek to add a non-compete provision to Separation Agreements.

Once an employee asks for a better package or different terms to a Separation Agreement, the employee may have technically rejected the employer’s offer. Therefore, an employee runs the risk of losing the guaranteed offer by making a counteroffer.  However, in practice most employers will typically not rescind their offer if an employee makes a counteroffer, although that is a possibility.

If you are facing decisions relating to a Separation Agreement or an imminent termination from employment, contact the law firm of Henrichsen Siegel, P.L.L.C. for a consultation to assist you.