Severance packages are a way for an employer and employee to part ways professionally. In exchange for a number of benefits, you secure a number of protections from your ex-employee. Like any corporate contract, they have a lot of leeway and may accomplish a lot.
The federal government does not require severance packages. But as CNBC reports, many HR leaders offer severance to all employees following an involuntary separation. Whether you want to draft a new severance package for your company or need to revise an old one, knowing the reasons to do so are important
Your severance options need shifting
As your company grows, so too do your offerings to your employees. Severance packages may involve a basic lump sum number — as many weeks of pay as there are years your employee worked, for example. But other severance options may include extending health insurance beyond termination or allowing an employee to retain or cash out their stock options.
You have more to protect
The protections gained from a severance package vary just as much as the benefits. These may include non-compete clauses to ensure your employee does not jump ship to a competitor or non-disparagement clauses to keep an employee from spreading negative information about your company for a certain time. Confidentiality agreements may help protect company IP assets and even protect the details of your severance package agreements.
Your employee might not accept it
Unless stipulated in another contract, your employee has zero requirements to accept the severance package. You may want to make sure that the severance package is beneficial enough to even consider.
These agreements are complex legal documents that may change with every termination case. When protecting yourself and your company, it is important to review the details and avoid confusing verbiage that backfires on you or your employee.