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Severance agreements, part-1: The employee’s perspective

A severance agreement, as many people in California and elsewhere would know, is meant for an employer and an aggrieved employee to come to a monetary settlement that would prevent the employee from staking any further claims from the employer. In addition, the severance agreement may contain confidentiality clauses, non-compete clauses and clauses that prohibit both the employee and the employer from speaking against each other.

This blog post and the next will look at severance agreements from both perspectives: the employee’s perspective and the employer’s perspective. First of all, let us look at the various clauses that can be covered in severance agreement.

Monetary package

Severance packages are often part the lay-off exercise that many organizations adapt from time to time for a variety of reasons. These packages are usually one-time settlements and, therefore, it is important for the employee to make sure that the sum of money that is being offered is fair. This is because, once an employee accepts a severance agreement, it may not be possible to hold the employer accountable for any matter in the future.


The other important point to keep in mind is the existence of any clause related to non-competition. Usually, non-compete clauses are part of an employment contract that prevent an employee from disclosing company secrets after the employee’s end of employment with that company. Sometimes, however, these non-compete agreements can be challenged in court and courts may prevent enforcement if the clause appears to be unjustified.

Trade secrets

Trade secrets are another point that is often covered in severance agreements. This could include customer data, technical details about products or services, or even secret recipes. Per most trade secret agreements, leaking of a trade secret may result in the employer seeking liquidated damages, which is a pre-decided amount, from the former employee.

Negotiating a severance package with the employer

Negotiating a severance agreement while keeping in mind the importance of all of the three aspects mentioned earlier can be challenging for many employees, especially when that employee has already lost his job and is staring at an uncertain future. If you wish to know more about the employee’s perspective of severance packages, it may be worth the time to visit our law firm’s webpage dedicated to this topic.