Severance Letter

A severance letter is a letter written by an employer to an employee who is in the process of being laid off. Typically, it features very specific wording, regarding the severance pay and other benefits the employee will receive—including health care coverage—and an agreement to not oppose the employees' efforts to attain unemployment benefits. If it does not have one of these provisions, the severance letter should explain why. In exchange, the employee must agree to release the employee from any legal and contractual obligations. This includes his agreeing not to file suit for any alleged discrimination. Furthermore, the employee agrees to keep the terms of the severance letter and accompanying package confidential, except to legal counsel and immediate family. Employees are usually given 21 days to accept, refuse, or attempt to renegotiate the contents of the severance letter.

Fast Facts

  • Employers are not legally obligated to provide severance packages to departing employees.
  • A signed severance letter can be revoked if the former employee can prove he signed it under duress.

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