If you’ve recently lost your job, you might be offered a severance agreement. You may have questions, like “How long do I have to sign a severance agreement?” And “what if my employer is not honoring the severance agreement?” These are common questions. In this guide, we break down what severance agreements are, how long you typically have to respond, and what to do if your employer fails to follow through on their promises.
What is a severance agreement?
A severance agreement is a contract between an employee and an employer. In short, the employer offers the employee a deal when the employee is terminated from their position at the company. In most severance contracts, the employee receives a fixed amount of monetary compensation. In exchange for this monetary compensation, the employee agrees to release all claims against the employer—in other words, the employee gives up their option to pursue legal action against the employer.
How do you qualify for severance pay?
The only way to truly “qualify” for severance pay is by signing a contract regarding severance pay before taking a position at a company. For example, many union contracts will have standardized legalese regarding severance pay. Company employment contracts may also mention severance pay. If severance pay is in your official contract, your employer must uphold the terms stated in the agreement. Otherwise, there is no legal obligation for an employer to pay severance to a departing employee.
When should I sign a severance agreement?
Rarely, severance agreements come with no obvious stipulations. For example, some companies may just want to thank you for your past employment with them and set you off on the right foot. You will likely be offered severance pay, along with other aspects of your severance package, such as healthcare through COBRA or some other benefit. Even if you have had no issues with your employer, you should have an attorney review the severance agreement language to make sure that you are protected.
When should I not sign a severance agreement?
If you have issues with your employer that could result in legal action against them, it makes sense to carefully consider whether or not signing a severance agreement is in your best interests as the employee. For example, if you have a discrimination case against your employer, signing a severance agreement may result in you receiving less compensation than if you were to pursue your discrimination claim.
Remember: When you sign a severance agreement, you legally give up your right to pursue legal action against your employer, which means you should never sign a severance agreement without reading it and fully considering your options first.
How long do I have to sign a severance agreement?
In most cases, employers provide 21 days to review a severance agreement, especially if the employee is over 40, in compliance with the Older Workers Benefit Protection Act (OWBPA). Additionally, if you are over 40 and do sign, you’re entitled to a 7-day revocation period—a window to change your mind.
However, the exact amount of time you have is defined in the agreement itself. Employers may impose shorter deadlines for employees under 40, and some agreements may include pressure tactics. If you feel rushed, seek legal advice immediately. Don’t forget, you do not have to sign right away, and signing without review can waive valuable rights.
A severance agreement lawyer can help clarify your rights and negotiate extensions or better terms if needed.
What should I do if my employer is not honoring a severance agreement?
If your employer is not honoring a severance agreement, it could amount to breach of contract; whether payments are missing, promised benefits weren’t delivered, or the terms were changed after signing.
In New Jersey, even verbal severance agreements or terms outlined in company policy may be enforceable if there’s supporting documentation like emails, termination letters, or HR handbooks that show what was promised.
If you signed a written severance agreement and your employer fails to follow through, you may have a legal claim for breach of contract, unpaid wages, or other remedies. Speak with a severance agreement lawyer to review your situation and take steps to secure what you’re owed.
Common signs your employer is not honoring a severance agreement:
- Missed or delayed severance payments
- Benefits like COBRA coverage or bonuses not delivered
- Agreement terms changed after signing
- Retaliation following your termination or agreement
What should I do if I have any other questions about severance agreements?
Because severance agreements sometimes deal with large amounts of money and various complicated issues, releases and waivers of your claims, it always makes sense to consult a legal professional, such as a severance agreement lawyer, if you have any questions before signing your severance agreement, especially if you are leaving the company with the potential to pursue legal claims against your employer.
Although you can ask your employer for clarification on specific wording in the contract, the best insight will come from an unbiased third party. This third party may also be able to help you with severance agreement negotiations to receive more compensation from your employer than they originally offered.
If you’re asking “How long do I have to sign a severance agreement?” or you’re dealing with an employer not honoring your severance, you don’t have to face it alone. Hamilton Law Firm helps executives and professionals across New Jersey review, negotiate, and enforce severance agreements with confidence. Contact us now to speak with a severance agreement lawyer.