Severance Agreement FAQs

Below are some Massachusetts Severance Agreement FAQs (frequently asked questions) and responses to those questions:

1. What is a severance agreement? A severance agreement is a contract between an employer and a current or former employee.  The employee usually gives up certain rights in exchange for pay and/or other benefits.

2. Do employers owe employees severance pay? A company may owe an employee severance pay if the company promised it to the employee in an employment contract or other policy. All employees who are let go from their company are not automatically owed severance pay.

3. What is typical severance pay? The amount of severance pay depends on a number of factors.  These include company policy, whether the employee has a contract, the length of the person’s service and facts about the person’s work history.

4. If there is no requirement that companies pay severance, why would they offer it? Companies may offer severance pay  to employees who are separating from the company in order to ease the transition. This is particularly true for long term employees. Companies typically also want to benefit from having the individual give up the right to bring a claim.

5. How can signing a severance agreement affect an individual’s future employment? Many severance agreements contain (a) non-compete agreements; (b)agreements that the individual won’t try solicit any of the employees or customers to a new firm; and/or (c) agreements that the individual must keep certain information confidential. These agreements may restrict the individual’s employment opportunities in the future.

6. What severance agreement FAQs do employees need to know before signing a severance agreement? Employees need to fully understand the agreement and need to know whether signing the agreement is in their best interest and whether there is a possibility of negotiating it.  Many people think that the agreement that they have been offered is “standard” or “boilerplate.”  In fact, there is no standard agreement and some are more onerous than others.  The terms of agreements may often be negotiated.

If you have any questions about severance agreements or severance pay or severance agreement FAQs in Massachusetts, please contact employment lawyer Maura Greene, Law Office of Maura Greene LLC, Six Beacon Street, Suite 205, Boston, Massachusetts at 617-936-1580 or  Maura Greene has been rated a Super Lawyer in employment for the past five years.  She is AV-rated, which is a peer review rating and is the highest rating an individual attorney may achieve.