Employers often utilize separation agreements for departing employees. In the most common situations, employees who are separating receive certain benefits in return for their agreement to release the employer and related parties from all claims relating to their employment. While there are numerous ways to approach such agreements, there are certain issues employers are well advised to consider regardless of the particular circumstances: Continue reading this entry
When an employer terminates an employee, it has to decide whether to offer the employee separation pay (severance) in return for a release of claims. (See previous Legal News: Employment Law Weekly Update, May 29, 2012). Employers are generally not legally required to provide separation pay. Some employers choose never to offer separation pay, or to do so only in very limited circumstances. For many employers, though, offering separation pay is almost the default position — they offer separation pay almost as a matter of course to terminated employees. This is no doubt driven in part by a desire to avoid the risk and expense of employment lawsuits. But, is it the right approach? After all, most terminated employees do not file lawsuits, and if an employer offers separation pay to all of them, it will be paying separation pay to a great many individuals who would never have pursued litigation.Continue reading this entry
While separation agreements are one way that an employer can effectively manage its post-employment litigation risks, the validity of a poorly drafted agreement could be contested in court. A recent decision serves as a reminder of the importance of drafting separation agreements in a clear manner that will survive legal scrutiny.