Offered a severance agreement? Read this before you sign

When an employment ends, the employer may offer a payment in return for a signed agreement. The offer can be reasonable and worth accepting. It should never be signed under time pressure without being understood.

What you are usually giving up

The core of a severance agreement is a release: you agree not to bring legal claims against the employer arising from your employment. You may also agree to confidentiality, to not disparage the company, to cooperate in future matters, and to limits on where you can work next.

Time to decide

For workers aged forty and over, federal law generally requires that an individual be given at least twenty-one days to consider a release of age discrimination claims, and seven days after signing to revoke it. The period is longer when the separation is part of a group programme. Younger workers may not have the same statutory protection, but reasonable time can still be requested.

Points worth negotiating

• The amount, and how it is calculated against your length of service.
• Continued health cover or a contribution to premiums.
• Treatment of unvested equity, bonuses and unused leave.
• The wording of any reference and how your departure will be announced.
• The breadth of restrictions on future work, which are often wider than necessary.

Before you sign

Keep copies of your contract, recent performance reviews and any relevant messages. If you believe your dismissal was unlawful, a signed release may end your right to pursue a claim, and deadlines for filing may already be running. A short review before signing is nearly always worth the cost.