Severance benefits may come with separation agreement
Published 05/06/05

 When a worker is terminated, her employer may offer severance benefits. It will often provide severance benefits in consideration of the worker signing a separation agreement with a release by the worker of any claims she may have against it. The worker should consider what led to her termination to evaluate whether the claims, if any, she has against her employer are more valuable than the severance benefits being offered. If in doubt, she should seek legal advice.

Separation agreements may also contain restrictions on the worker's future conduct such as a prohibition against disclosing the employer's confidential and/or proprietary information, soliciting remaining workers away from the employer for a period of time, and/or not competing with the employer for a period of time. All of these provisions could have a substantial impact on the worker's future ability to earn a living and, therefore, should not be entered into hastily or in order to get a severance benefit. While workers generally are prohibited from disclosing or using their former employer's trade secrets, by agreement the worker may agree not to use or disclose certain information which may not meet the legal definition of any trade secret. Furthermore, absent an agreement, an employer generally cannot prohibit a former worker from competing or offering a job to workers of the employer.

In a layoff situation, the worker may face a "take it" or "leave it" option as to the terms of the separation agreement and corresponding severance benefits, since the employer will probably be less likely to negotiate with a laid-off worker when that may lead to the negotiation with the remaining laid-off workers.

It is also important to note that it is not uncommon that a standard separation agreement will have a provision affirming the obligations under the company's standard covenant not to compete or other agreements and the worker should confirm whether she has, in fact, signed the covenant to not compete. Such signed agreements would be part of the worker's personnel file and therefore she is entitled to a copy whether the employer is located in Massachusetts or New Hampshire . If she has not signed a covenant not to compete, it is possible the employer may attempt to use the separation agreement may still create a covenant not to compete obligation where none previously existed.

A Court may also look differently on a non-compete signed as part of an agreement related to the worker's firing than a non-compete presented to a worker by his current boss whose good graces she relies upon to keep her job.

J. Daniel Marr is a director and shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and business persons on a variety of legal issues, including employment, and advocating on their behalf. You can reach Attorney Marr by e-mail at: dmarr@hamker.com

This information is general information and may not reflect the most current legal developments, verdicts or settlements. The information provided should not be relied upon as an indication of the actual state of the law or of future developments. The information contained on the Hamblett & Kerrigan website is for informational purposes only and does not constitute legal advice. If the information referenced may be of legal importance to you, you should consult with an attorney to provide you with legal guidance and opinion as the the effect of the current law upon your situation.