What to Check in a Severance Agreement
A severance agreement isn't just about the money. Before you sign, you need to understand exactly what you're giving up — and whether you're getting a fair deal in return.
- Severance pay — is it adequate? The rule of thumb is 1-2 weeks of pay per year of service, but this varies by industry and role. Executive packages often include 3-12 months of salary.
- Benefits continuation — how long does health insurance last? COBRA coverage typically lasts 18 months, but better packages include the employer paying COBRA premiums for several months.
- Restrictive covenants — are non-compete and non-solicitation clauses reasonable in scope and duration? An overbroad non-compete can block you from working in your entire industry for years.
- Release language — are you waiving more rights than is standard? Look for language that goes beyond standard employment claims to include things like personal injury or property claims.
- Equity and stock — what happens to unvested shares? Some agreements accelerate vesting; others forfeit everything. This can be worth more than the cash severance.
Can You Negotiate Severance?
Yes — severance agreements are absolutely negotiable. Companies expect some back-and-forth, especially from mid-level and senior employees. Common negotiation points:
- More severance pay — ask for an additional 2-4 weeks, especially if you were terminated without cause or have long tenure
- Extended benefits — request employer-paid COBRA for 6-12 months instead of the standard 1-3
- Removal of non-compete — argue that it's not reasonably necessary to protect the company's legitimate business interests
- Mutual non-disparagement — instead of one-way (only you can't say anything negative), make it mutual
- Positive reference letter — get the company to agree in writing to provide a neutral or positive reference
💡 Tip: Always negotiate in writing (email is fine). Verbal promises about references or future cooperation are not enforceable. Get it in the agreement.
AI Review — 30 Seconds
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