Understanding the Terms of a Severance Agreement
Texas employers are not required to offer severance payments to employees they lay off or terminate, unless there is a specific employment contract or company policy requiring the payments. Since most Texas employees are “at will,” the employment relationship can be ended by the employer or the employee for any reason except an illegal reason.
Why then would an employer offer to pay severance when it does not have to? Companies often say that severance is being offered to assist employees with their transition out of the company and to help them while they look for another job. That may be true, but it is not why most companies offer severance. To receive severance payments, you will likely be asked to sign a severance agreement, which is usually a long, complicated contract containing several terms that are beneficial only to the employer. Severance packages generally boil down to the employer paying you in exchange for two things:
- Your agreement to not sue the company for any employment-related legal claims you may have, such as workplace discrimination; and
- Your agreement to restrictive covenants, such as noncompetition, non-solicitation and confidentiality or non-disclosure provisions that may limit your future employment.
Before signing any severance agreement, you should take time to understand its provisions. Also, make sure you understand what the agreement says about the number of days you have to sign it, and when that time period starts. While the amount of time an employer will give you may vary, employers should give you an opportunity to consult with an attorney first. The severance attorneys at Jackson Spencer Law are available to advise you, so contact us today.