Different levels of employees might be offered a severance package or agreement, but this arrangement can be more common for executive-level employees. For executives who have been fired from their jobs, here is what your package might include.
While there is no legal requirement for a terminated employee to receive monetary compensation upon exit, this is a common component. The amount of money that an executive can expect, if any, depends on factors such as the tenure with the company, reasons for being fired, and agreement between the company or human resources department and the exiting employee. If you have unused vacation or sick time that has accrued, this might also get converted to monetary value to be added to your package. Payouts can be in a lump sum or distributed over a certain time period such as weeks or months.
Release of liability
Another motivating factor for your severance package is that in agreeing to the severance package, you cannot file a lawsuit against your employer for wrongful termination. This protects the employer from incurring future legal fees if the grounds for termination were within state and federal guidelines. If you suspect that the grounds of termination were based on discrimination or similar situations, it is advisable to seek legal advice before signing any agreement.
Health insurance coverage
Your employer might also cover all of your health insurance premiums for an agreed-upon amount of time following your termination. This is another term of severance that is not legally required as fired employees are eligible for Continuation of Health Coverage, or COBRA, but this coverage is often quite expensive. If you don’t see insurance or health insurance outlined in your severance agreement, inquire if your employer will cover your health insurance premiums during your transition to another workplace.
Non-disclosure agreement or protection against defamation
As part of the legal protection that a company wishes to secure, you may have to sign a non-disclosure agreement (NDA) or an agreement that prevents you from speaking out or seeking to damage the reputation of your employer. Some executives sign an NDA as part of their initial job contract while others can expect it as part of the severance agreement. The purpose of these terms of your severance is to prevent you from sharing trade secrets or copyrighted information that you knew or worked with during your time as an executive with the company.