Severance Agreements

Severance agreements are contracts between an employer and an employee specifying the terms of an employment termination. They provide financial support to employees who lose their jobs through no fault of their own, usually in return for the employee's waiver of legal claims connected with the employment relationship—for instance, discrimination or wrongful discharge suits. There is no requirement to offer severance pay under federal law, but some state laws require it in some situations.

Employers should use severance agreements whenever a departing employee is provided severance pay or other benefits to which he or she is not already entitled. The agreement should be crafted by a knowledgeable employment attorney.