You’ve just been told “you’re fired.”  You are later emailed a severance or separation agreement and told to sign it.  Now what?  We review severance agreements or separation agreements often.  Clients are often surprised to learn that there is no mandated form such agreements must take.  Because they are somewhat customary here in Silicon Valley, some clients are further surprised to learn that not everyone is entitled to severance pay, even after working at a company for a long time.  When you are fired, you are entitled to payment of all wages on or before your last day.  Depending on the size of your company, you may also be entitled to continue your medical benefits under COBRA.  Finally, you are entitled to unemployment compensation, unless you are fired for misconduct.  How do you get severance pay?

Severance agreements are contracts. There is no law that says there must be one.** 

Unless your company has a company-wide policy of providing severance benefits that could create an “implied” benefit, you are only entitled to things like severance pay if you have an express contract. Most terminated employees are not entitled to severance; rather, it is something that employers typically use to ensure that an employee doesn’t sue.  If your employer offers a severance package, what should it include?

There is no “laundry list” of items that must be in a severance agreement.  There are, however, many things that are typically included.  It is also important to understand that because things like severance pay are not mandated by law, but rather a matter of contract, even employees who are terminated have some power to negotiate a good deal.   Rousso & Jackel can review your proposed severance agreement and advise on negotiating.  If you would like to read our primer on severance agreements, click here.

**Other than the “WARN” Act, which only applies to mass layoffs