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Severance agreement terms vary greatly

The conditions of a severance agreement are often up for negotiation. When you are working to determine whether you should accept one or not, you should carefully consider each term that is being presented to you. These can vary greatly, so don't base your decision off what someone else got in theirs.

One of the most common terms of a package is severance pay. Your length of employment and the position you hold will likely have a part in what you are offered. It is typical for executives to receive six to 12 months, but the chief executive officer (CEO) of a company might receive more.

When you are considering severance pay, you need to look at how it will be paid. Sometimes, you can receive a lump sum payment, but some employers pay out in installments. Check the terms carefully in both cases because you don't want to be subject to mitigation, offsets or clawbacks.

Medical benefits are another area where you might be able to negotiate. Having the employer pay the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) benefits might seem like a good idea, but those payments might be taxable. It might be better to find other options to get the coverage paid.

Some other areas that you might be able to negotiate at the end of the employment agreement include:

  • Vacation time or paid time off pay
  • Stock options or restricted stock units
  • Reference availability
  • Legal fee payments

The employer might also include conditions to help them in the agreement. These include things like noncompete clauses and confidentiality agreements. Be sure you understand what these mean so that you can comply with them if you ever split from the company.

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