When you hear the words “Separation Agreement,” your first thought may be of a couple splitting up. It is not uncommon for a couple looking to find a more amicable end to opt for a Separation Agreement instead of going to court. It can also apply to a different kind of divorce – a divorce from an employer. An employment Separation Agreement is a contract between an employer and employee that dictates the terms of the employee’s termination with the company.
A Separation Agreement typically contains the amount of severance pay an employee will receive after being terminated. This pay will either be delivered in one lump sum or in installments. The amount of pay is usually determined by position or tenure within the company, such as one week’s pay for every year of service. The Separation Agreement should also clearly state the method by which the severance pay will be delivered.
If you are in the position where you’re getting a Separation Agreement, it may look like a blessing. It normally means you have to start looking for jobs again, and having some pay to cover the time unemployed is wonderful. However, there is a catch. Employers always ask for something in return for severance pay, which is the primary reason why they are offering you the Separation Agreement in the first place. They are offering you something in exchange for giving them something.
Employers typically want at least one of two things from a former employee: confidentiality and protection from lawsuits. Confidentiality means that you will not discuss the trade secrets of your former employer after your employment is over. It guarantees the company that you will not take their secret formula to another company. This may also include clauses about taking clients with you or making disparaging remarks about the company. The employer will also want you to sign away your right to sue them. This protects them from legal repercussions of terminating your position.
In New York, a Separation Agreement is not legally guaranteed, although they may be included in the original contract you signed when joining the company. They are common for higher-up executives and in situations when the employee was fired for no fault of their own, such as eliminating a team or changing business model. So should you sign it? Take your time to consider. Remember that the employer wants something from you, and you can use that to leverage higher severance pay or benefits. Consider the Separation Agreement as a starting point.
You want someone with experience negotiating Separation Agreements to look over yours before you sign it. At Canales PLLC, we look at New York Separation Agreements all the time, and we can let you know if you should be getting more. To learn more, contact Canales PLLC today!
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