Going into business in Georgia means you will be faced with a number of terms that you may have never seen before, or that you may have a limited understanding of. For example, the term severance agreement is sometimes thrown around, but what exactly does it mean?
According to The Free Dictionary, a severance agreement is simply a contract that states the terms an employee will leave on. However, this is an umbrella definition and severance agreements can often cover a much wider range of the financial aspects of leaving a business. For example, there are certain types of severance agreements that are made as incentive to get an employee to retire. These are usually packages that have high benefits or pay involved. Extended benefits such as insurance or healthcare are also common.
However, the key to this agreement is that both the employee and employer will have certain contractual obligations that need to be fulfilled in order for these benefits to be given. This means that if you don’t fulfil the severance agreement, you won’t get your benefits, pay, or so on. Common obligations inserted into severance agreements include making sure that an employee can’t work for a competitor for a certain period of time – known as a non-compete clause – or agreeing not to file wrongful dismissal suits against the employer.
The jury is out on whether or not severance agreements are necessary or even good. However, if you are dealing with one, you should read everything carefully and ask as many questions as you need in order to fully understand what you are signing.