Former Employers and Potential Employers: What Should Your Legal Agreement Be? Part 1

Spell Out Reference Details in Your Separation Agreement

Job separation: most people cringe at the very idea, although most of us have experienced it. And to be fair, it’s not always a bad thing. Oftentimes, it occurs for a positive reason; the advancement of a career or a movement to “greener pastures.”

Unfortunately, there is also the circumstance where a separation is initiated by the employer; a lay-off, firing or downsizing. And let’s be honest, these are generally unpleasant for the suddenly-out-of-work employee. However, some employer-initiated separations come with a “separation agreement” (sometimes referred to as Termination Agreement, Severance Agreement or Separation Agreement and General Release), which specifies the terms of your termination and severance package. And depending on the circumstances of the separation, these packages can be quite generous. So, when handled correctly, this agreement can be a useful and positive tool for the employee.

Don’t miss the key phrase here: when handled correctly. Employees should be aware that these separation documents are drawn up by the employer, and generally favor them; they are also a contract in which the employee relinquishes their legal rights. As such, they need to be reviewed very carefully.

To protect yourself, you must be very careful with the wording of various documents. Have the key details spelled out legally, by an attorney, and make sure you understand the ramifications of the agreement. This is of particular importance if you sued your former employer and are now negotiating a separation package.(Note: In most states, you will not want to use the word “severance” or “severance agreement.” Severance is a term used by both federal and state governments to denote a specific type of payment. It may adversely impact your tax, unemployment and other benefits. A labor and employment attorney can advise you on this subject.)

One key thing that is often overlooked in the negotiation of these packages is the rules about how this (now former) employer will react to a request from a potential employer for reference information. This is an important issue; don’t let it fall through the cracks!

In our next post I will post tips on what former employers should and should not be saying and what should be spelled out in your agreement. Its important to be clear of the expectations.

For more information about Allison and Taylor, Inc.’s professional reference checking services, click here.