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With the recent economic downturn, some corporate executives are concerned about receiving fair severance packages when separating from a company. While many executives work pursuant to employment contracts that address severance pay, any executive without the benefit of such pre-negotiated terms who is concerned about a possible separation should prepare to negotiate a separation agreement that addresses severance pay.
Severance packages vary greatly and depend upon factors such as: the employee’s status, the length of time the employee worked for the company, company policy, the employer’s size and financial condition, industry customs, and the circumstances surrounding the separation. Typically, severance pay amounts are calculated in terms of time; for example, an executive might receive a lump sum amount equivalent to three months’ salary. In addition, some severance packages include funds to reflect commission payments or bonuses that were earned (or expected), but unpaid. Stock options may also be addressed.
When confronted by a potential termination, an executive should seek legal counsel to assess his rights and develop a negotiation strategy. While the company has the upper hand in negotiations when a separation is imminent, a well-planned strategy and a careful approach may result in an increased severance pay package for the executive.
To speak with an employment law attorney regarding a separation agreement or severance pay, contact the employment law attorneys at Clouse Dunn LLP at info@cdklawyers.com.
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