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How can severance agreements help avoid employment litigation?

As an employer in Texas, or elsewhere, you may deem it necessary at some point to terminate a worker’s employment. Depending on the circumstances, however, this may prove difficult, and could result in costly litigation. In order to avoid a drawn out legal dispute, you may consider using a severance agreement.

According to the U.S. Equal Employment Opportunity Commission, a severance agreement is a type of contract between you and your employee, which stipulates the terms of his or her termination. Essentially, these types of agreements are a type of release. The worker signs the contract, agreeing that he or she will not take legal action against you or your company. In exchange, you provide him or her certain benefits.

In the eyes of the law, your employee’s right to file a lawsuit against you is of worth. As such, you must give them something extra to compensate them for giving up that right. Many employers who use such agreements offer their workers a sum of money. In the release, it is important that you not only specify what you will provide the employee, but also specifics regarding the rights that the workers are waiving.

Your employees must decide to sign severance agreements of their own volition. Therefore, it is important that there is no hint of coercion on your part to convince them to sign. If it is perceived that you have threatened, or otherwise strong armed your worker into signing a severance agreement, the court may choose not to enforce it. Therefore, it is advisable that you allow your workers reasonable time to consider whether or not to sign. You may even suggest that they consult with an attorney before making their decision.

This post has provided a general overview of severance agreements, and how they may be used to avoid employment disputes. However, you should keep in mind that each case is unique. As such, you should consider this post only as general information, and not as legal advice.   

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