Kaufman & Forman, P.C.
Call to arrange a consultation
678-957-7769 | 770-390-9200
Contact Us
practice areas

What businesses should keep in mind about severance agreements

It makes sound business sense for an organization that is parting ways with a high-level employee to make the decision to have a severance agreement drawn up. That's because while it may end up costing them up-front in the form of additional compensation, enhanced benefits or other “in kind” consideration, it can nevertheless grant much-needed peace of mind going forward.

It's worth noting, however, that experts indicate that businesses should be aware at the outset of any actions relating to the execution of severance agreements that the language of certain provisions will invariably end up being challenged by the employee such that further negotiation may prove necessary.

  • Release of claims: Businesses will typically draft this provision in such a way that the employee will forfeit any and all legal claims they may have against them. While this is understandable, the reality is that the employee may only be willing to do this if the release of claims is mutual, meaning the business releases any and all claims it may have against the employee.
  • Restrictive covenants: While there is a very good chance that the business already had the employee agree to no-solicit and/or non-compete agreements in the initial employment contract, it may seek to expand upon this in the severance agreement. In these situations, or where such terms are being introduced for the first time, experts indicate that businesses should be prepared for the employee to either challenge their scope and timeframe, or reject their inclusion altogether.
  • Confidential information: A commonly included provision in severance agreements is one requiring the employee to keep its terms confidential. Experts indicate that while most employees won't object to this, they may seek to carve out certain exceptions such as accountants, attorneys, financial planners and, of course, immediate family.     

What the foregoing serves to illustrate is that businesses should give very serious consideration to retaining the services of an experienced legal profession to handle all matters relating to severance agreements from the drafting to the negotiations. Indeed, this too can grant much-needed peace of mind going forward. 

No Comments

Leave a comment
Comment Information

Contact Kaufman & Forman, P.C. Now

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

get Legal Help Now

Kaufman & Forman, P.C.
8215 Roswell Road, Building 800
Atlanta, GA 30350

Toll Free: 800-461-5864
Phone: 678-957-7769
Fax: 770-395-6720
Atlanta Law Office Map

Review Us

Robert Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the May issue of The American Lawyer & Corporate Counsel magazine.Alex Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the December issue of The American Lawyer & Corporate Counsel magazine.

*AV Preeminent and BV Distinguished are certification marks of Reed Elsevier Properties Inc., used in accordance with the Martindale-Hubbell certification procedures, standards and policies. Martindale-Hubbell is the facilitator of a peer review rating process. Ratings reflect the confidential opinions of members of the bar and the judiciary. Martindale-Hubbell ratings fall into two categories: legal ability and general ethical standards.