After learning that your employment has ended, you may feel comforted if your employer offers you a severance package. A generous package could help to support you until you find a new job.
Unfortunately, some severance agreements look great on paper but may compromise your financial security in the not-too-distant future. One way to help ensure the offer is as solid as it appears is to review it thoroughly for unfavorable terms.
Issues to look for before you sign a severance agreement
No law requires employers to provide or offer exiting employees a severance package after an employment termination. However, some entities do. It’s important, however, to look past the financial amount and spot provisions that could be potential red flags.
Those who sign severance contracts with restrictive non-compete clauses may find it hard to obtain a new position. Some agreements can prohibit former employees from working in a competing company for years.
No insurance continuation
Since many New York employers offer continuing insurance options as part of a severance agreement, you have a right to question why yours does not. If you or a family member regularly incur medical expenses, gaps in coverage could lead to substantial financial issues.
Release of claims
Be wary of clauses that compromise your right to hold the employer responsible for valid grievances you may have against them. Once both parties sign, such a contract typically binds you to its terms.
Help from a legal professional
The terms outlined in a severance agreement can offer reassurance after a job loss. However, it’s important to be sure to look closely and weigh its pros and cons carefully before adding your signature. For an extra layer of protection, consider having a legal professional look it over.