Severance Agreements: A Win-Win Situation

On Behalf of | Apr 30, 2018 | Wrongful Termination |



When an employer or employee finally concludes that the employment relationship must end, both sides should consider a key opportunity – negotiating a severance agreement. Why? When an employer-employee relationship ends on less than amicable terms or where there is already a potential dispute, such agreements can help both sides avoid going down a road of lengthy litigation and legal costs. When crafted properly, severance agreements benefit both sides. Here are some reasons why:

Entitlement to Additional Rights and Benefits not Afforded in the Courts

Well-crafted severance agreements promote achieving what each party desires by allowing creative solutions. The severance agreement provides an opportunity and forum in which both sides can request terms beneficial to their side, such as letters of recommendation, extended medical benefits, an agreement not to fight unemployment benefits, releases of potential claims, etc.

Going the lawsuit route could result in an award of money damages – but rarely more than that. Severance agreements offer the parties rights beyond what the courts will typically award. For example, a mutual release of all claims can be achieved – allowing both sides to walk away from the dispute with greater confidence that they will not need to battle again. The parties can also agree not to disparage each other in the future to avoid worries about lasting grudges.

Avoiding Uncertainty

Severance agreements provide certainty, allowing the employer and employee to mitigate the risks that are inherent to litigation, and provide the employee extra compensation to which he/she may not otherwise be entitled.

When an employment relationship ends, it may be unclear whether a legal right was violated or not.  An employee may feel that the termination was unlawful. What were the facts on the employer’s end? What really motivated the employer to take the adverse action? Until a lawsuit is filed and discovery occurs (the process in which both sides submit and answer questions and provide documents), both parties will likely not know the whole story.

Justice is rarely swift. The more time spent in litigation, the greater possible risk that new information/evidence may be revealed which changes your legal position.  A new document may be uncovered, a new witness may come forward, or a key witness disappears.

For more information about severance agreements, contact Freeland Law APC for a consultation with Michael Freeland, experienced employment lawyer serving San Diego, La Mesa and El Cajon, California. Michael Freeland has been practicing law for more than 27 years and specializes in employment law matters.

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