A severance agreement between an employer and a departing employee has the potential to make the termination process go more smoothly on both sides.
However, in drafting such an agreement there are certain rules to follow. If the departing employee is 40 or older, the agreement must meet exacting requirements in order to be enforceable.
About the severance agreement
A severance agreement is a contract between an employer and a departing employee. The purpose is to compensate the employee in some way for agreeing to abide by certain post-employment limitations. Often the former employer uses a severance agreement to avoid possible litigation.
Requirements for older employees
Severance agreements for employees 40 years of age and older must follow the requirements established under the Age Discrimination in Employment Act (ADEA) and the Older Workers Benefit Protection Plan (OWBP), which speak to time frames. For example, an older departing worker must have 21 days in which to consider a severance agreement. In addition, the EEOC requires the use of specific language, which must not be “overly broad and misleading” in order to be enforceable in court. In fact, the writer must avoid the use of legal jargon and complex sentences. The language must be absolutely clear and easy to understand.
A further recommendation
Older employees with severance agreements must be able to depend on fair treatment even as they leave their place of employment behind. This is why these particular agreements must comply with standards set by the ADEA, OWBP and EEOC. In addition, each agreement must contain a recommendation for the recipient to seek legal guidance before signing. An attorney can review the document and ensure that it is enforceable should the need to initiate a court case ever arise.