Severance Agreements

The realm of employment law is complex, with various facets requiring attention from both employers and employees. One critical area that often necessitates legal guidance is severance agreements. At Howard Lewis & Petersen, we offer services to assist businesses in Provo, Utah, with crafting well-structured severance agreements that align with both state and federal laws.

What Is a Severance Agreement?

A severance agreement is a legal contract between an employer and an employee, outlining the terms under which the employment relationship will end. It specifies the benefits or compensation that an employee will receive when their employment is terminated, either voluntarily or involuntarily. This type of agreement serves to protect both parties — ensuring that the employee receives fair compensation while safeguarding the employer against potential legal claims.

What Should a Severance Agreement Include?

Severance agreements can vary widely, but they generally cover specific key elements, such as:

  • Compensation and Benefits: This is the core of the severance agreement. It outlines the monetary payment, continuation of health benefits, and any unused vacation pay.
  • Non-compete Clauses: Many Utah severance agreements include a non-compete clause, restricting the employee from working for competitors for a specified time and geographical range.
  • Confidentiality: To protect proprietary information, most agreements contain a clause requiring the departing employee to maintain confidentiality.
  • Dispute Resolution: It’s advisable to include a clause specifying the methods for resolving any disagreements regarding the agreement, such as arbitration or litigation.
  • Release of Claims: This clause protects the employer from any future lawsuits regarding the employment relationship.

Not all employees are eligible for a severance agreement. Eligibility is often determined by the employer and may be based on factors such as length of service, position in the company, and reasons for termination. Employers should be cautious to ensure that the criteria for eligibility do not discriminate against any protected classes of employees. For comprehensive and compliant agreements, businesses should consult with business lawyers in Utah.

Drafting a Severance Agreement

Drafting a severance agreement that is both legally sound and fair requires meticulous attention to detail and legal guidance. Below are some crucial best practices to follow when crafting this important legal document.

  • Consult Legal Advice: One of the foremost steps in drafting a severance agreement is to consult an experienced Utah employment lawyer or business lawyer. They will offer exhaustive reviews of terms, conditions, and clauses, ensuring that the agreement adheres to both federal and state laws.
  • Customize the Agreement: A generic, one-size-fits-all severance agreement is rarely effective and can lead to significant legal issues down the road. Each severance agreement should be tailored to address the unique circumstances surrounding the employee’s departure, such as their role, tenure, and reason for leaving.
  • Be Transparent With Obligations: A well-drafted severance agreement should explicitly outline the obligations and responsibilities of both parties. This includes everything from severance pay and benefit provisions to non-compete clauses and confidentiality agreements.
  • Allow Employee Review: Last but not least, offer the departing employee sufficient time to review the agreement. This not only instills confidence but also ensures that the employee fully understands the terms and conditions they are agreeing to, thereby minimizing the potential for legal disputes down the line.

Severance agreements serve as essential instruments for defining the terms under which an employee departs from a company. They mitigate risks for both the employer and the employee. With the legal complexities involved, consulting a Utah employment lawyer such as Howard Lewis & Petersen is crucial for drafting an agreement that meets legal standards and serves the interests of both parties. Contact us today for a consultation to have legal help in drafting and reviewing your severance agreements in Provo, Utah.