What’s Severance Pay?
Also referred as separation pay, continuation pay or termination pay, severance pay simply refers to money and benefits offered by the employers to employees who are who are fired, laid off or who have resigned. Basically, California employees are usually required to sign a severance agreement each time their employers terminate them from their duty.
Severance agreements can also be referred as a General Release, Exit Agreement, Termination Agreement, Separation Agreement, or other similar terms.
Why do Employers in California Prefer Having Work Severance Agreements?
First and foremost, be informed that work severance agreements always favor the employers. An employer in most cases will often try to use extremely broad language in his/ her severance agreement in order to insulate him or herself from all future legal liability and lawsuits.
By having employees sign first their legal rights, an employer can avoid paying for any wrongful act he or she may have done to an employee.
What Should You Do as an Employee if you Receive a Severance Agreement?
Once you receive an employment severance agreement, as an employee you should never ever let your employer force or pressure you to accept it. The same as other contracts, all the terms in a severance agreement, including the amount of cash you’ll receive have to be negotiable.
You must ensure that you go through the severance agreement carefully and try to know the obligations as well as the consequences. It’s important that you ask your employer to issue you with a copy of the agreement so that you can review it from time to time.
When Should You Sign your Waiver or Severance Agreement?
It is important that employees avoid signing the waiver or severance agreements until they understand their consequences or think the terms in them are fair. Also, it’s ideal that an employer consults an employment lawyer to understand if his or her rights were violated before he/ she can accept the waiver or severance agreement.
What are the Additional Standard Provisions Presence in a Severance Pay Agreement?
*Classification:-
Refers to how the employers classify departing employees’ severance can make a huge difference in employees’ capability of obtaining the unemployment benefits.
*Taxes:-
Simply indicates that it’s possible to allocate all of severance payments to non- taxable claims.
Last, but definitely not least, for more information about severance agreements in California and how you can make use of it if you’re an employer or employee, feel free to contact us.
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