When executives negotiate severance packages, it’s important to consider the possibility of future disputes. Typically, severance packages adhere to the terms outlined in employee contracts and state laws. However, it’s wise to be aware of the finer points of negotiation.
Key legal strategies for negotiating severance packages
Following a clear strategy is essential when it comes to reaching severance agreements. For starters, executives should ensure that severance packages clearly specify payment structures. This includes the amount, payment schedule, and any conditions tied to the payout.
Review and understand all clauses
Many severance packages include non-compete or non-solicitation clauses. It’s important to review and negotiate these terms so that they’re reasonable and enforceable.
For example, it’s important for employers to write non-compete clauses that are not overly broad or restrictive, as this may result in them being unenforceable. These clauses must be designed to protect the business, must not have an overly lengthy timeline, and should only focus on a specific geographic area.
On top of that, it’s wise to fully review the release of claims element of the severance agreement. This clause usually requires executives to waive any potential legal claims against the employer in exchange for the severance package. As such, making sure this release is comprehensive is a must.
Finally, executives may want to negotiate for confidentiality and non-disparagement provisions in order to protect their reputations. These provisions need to be clearly defined in order to avoid ambiguity that may lead to disputes.
Negotiate to avoid complications
Negotiating a severance package is critical for the security of an executive’s career. A clear, well-structured agreement can provide peace of mind and ensure a smooth transition to the next chapter of their career.