Employers almost always require employees to enter into releases in exchange for payment of severance. A release is a document wherein in exchange for payment, the employee gives up the right to sue and agrees to a number of other provisions.There can be some pitfalls in these documents which we set out below. This is a non-exhaustive list.
Confidentiality Provisions
Employers often insist on confidentiality provisions in releases. Care must be taken to ensure that the confidentiality provisions are restricted to the settlement, and not too broad.
Non-Disparagement Provisions
Non-disparagement provisions basically say that you won't say anything negative about the company. In my view, it is frankly better for employers not to give employees anything to complain about during their employment/dismissal. Not all employers subscribe to this view and so will insist on non-disparagement. .
Non-Solicitation/Non Competition Provisions
Non solicitation clauses say an individual will not try to hire away staff or poach clients. Non-competition suggests employees will not compete with the employee. In my view, employees should almost never agree to these clauses unless they are paid the full contractual value of these clauses, which should be quite high. These are essentially separate issues from the termination, in our view.
Clawbacks of Severance.
It is not uncommon for a provision to be added that leads to a clawback of severance in the event any provisions of the agreement are breached. These should only be agreed to in appropriate cases.
Negotiate
There can be a number of other provisions in these agreements, but like the rest of a severance package, these issues are negotiable.
If you are an employee or employer requiring assistance with these issues, please feel free to contact us.
The information contained in this article is not legal advice. No solicitor client relationship is formed through this article. The reader is encouraged to retain counsel for advice in these matters.
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