When making any business decision, company owners keep the interests of their businesses at the forefront. Similarly, employees consider their own best interest when deciding to join a company. A severance agreement can be considered a middle ground between the two parties — the policy protects employees and employers alike in the event of a job loss. Before looking at what a severance agreement should cover in next week’s post, lets first look at when a severance agreement should be negotiated.

Ideally, the best time to negotiate the terms of a severance agreement is when an employee is getting hired, and it should be outlined right in the employment agreement. Though it is common to include severance provisions within an employment agreement in high-level positions, they should also be included in middle-level ones. Employees who do not see it in their contracts may want to consider asking about how the company handles termination with cause and termination without cause.

If an employee is asked to sign a restrictive clause — a clause that prohibits him or her from working for certain similar firms and limits his or her future employment opportunities for a fixed amount of time — he or she may want to ask for severance to bridge the gap between jobs.

If a person is terminated without cause — where an employee did not fail to meet pre-set standards or violate company policy or act with misconduct or negligence — he or she may be entitled to severance pay. Even if it was not negotiated when an employee was hired, he or she may be able to request it later.

If severance was not negotiated when an employee was hired or if an employee is not sure what is supposed to be covered in a severance agreement, it may be in the employee’s best interest to consult an attorney, and go over the employment contract with them, since this post does not offer legal advice.

Source: learnvest.com, “Should you negotiate a severance agreement?,” Stacey Hawley, May 7, 2013