Severance Agreements

Severance pay is money an employer pays certain employees after they have been fired, laid off, or otherwise terminated. It is intended to soften the blow of losing your job

Policies and practices vary greatly from one employer to the next, but most employers pay severance only to employees who have lost their jobs because their position was eliminated, or because they were laid off as part of a mass layoff or reduction in force. In some workplaces, employees also may be eligible to receive severance when they retire, when they were fired without cause, or when they resign for an agreed-upon "good reason."

Employers are not legally required to have a severance policy. However, if an employer does have a severance plan, then it must pay any employee who meets its eligibility requirements. Often, this can include having worked for a company for a minimum number of years and losing your job through no fault of your own. It also can include other requirements, such as staying with the company through a transition period such as until a merger has been completed or until you have finished training your replacement.

Most, but not all, severance policies require employees to sign a separation agreement in which they agree to give up any legal claims they have against the employer by signing a release. They also typically require employees to agree to keep the terms of the severance agreement confidential, and not to disparage the employer. But see article: Non-Disparagement Clause Cannot Prevent Employee From Discussing Discrimination.

In addition to severance policies and plans, an employer must pay you severance if you meet the requirements to receive severance under your employment contract. While many employees do not have individual contracts, let alone severance provisions in them, it is not unusual for top executives and managers to negotiate termination pay provisions into their contracts.

Further, for certain mass layoffs and plant closings, the New Jersey WARN Act requires employers to provide 90 days advance notice to employees before they lose their jobs, and to pay them at least one week of severance per year of service. For more information, please see our article: New Severance Entitlement to New Jersey Employees Subject to Mass Layoffs.

Severance agreements typically require you to sign away important legal rights before you can receive payments. As a result, before you decide whether to accept an offer, it is important to have an experienced severance agreement lawyer in New Jersey review it and help make sure you completely understand and agree with it. 

Our New Jersey severance pay attorneys have the experience to review your severance offer, explain it to you in plain English, and provide you with the recommendations and advice you need. Please feel free to call us at (201) 777-2250.

If you are entitled to receive termination pay, the amount you will receive is based on your employer’s policy or practice. For example, some employers offer one or two weeks of pay for each year you have worked for them. Other employers decide how much to pay each employee on a discretionary basis, meaning they make an individual decision for each employee.

If you are negotiating a new employment agreement, you might be able to include a severance provision in the contract.

Likewise, if you already lost your job and were offered severance pay, it might be possible to negotiate a better separation package. For example, with the help of a lawyer you might be able to negotiate for additional money, or to modify or eliminate a problematic provision such as a non-compete clause. It even might be possible to add advantageous provisions, like your former employer agreeing to pay your severance in a lump sum rather than over time, or to provide you a neutral or positive job reference.

Even if your employer has not offered you any severance pay, it still might be possible to negotiate a package on your behalf. This is especially true if you have a legal claim, such as if you experienced discrimination or retaliation, or were otherwise wrongfully discharged.

In fact, sometimes employers will pay severance to employees who do not have legal claims, especially if they worked for the employer for a long time, or the decision to fire them was particularly unfair.

Our New Jersey severance agreement lawyers frequently negotiate severance packages for clients with and without legal claims.

If you would like help negotiating a severance package before you are hired or after you have been fired or laid off, or if you need help understanding the offer you received in New Jersey or New York, we can help. Please contact us online, or call us at (201) 777-2250, to schedule a meeting with one of our New Jersey severance pay attorneys.