Severance negotiations are transactions between an employer and an employee with, usually, different interests, expectations, legal positions, and financial incentives. Severance negotiation involves some aspects of contract law, compensation law, employment law, alternative dispute resolution, and negotiation methods.
Some companies require that their employees sign a well drafted written employment contract that provides specific information regarding the event of separation and severance payment. The employment or change in control agreement often includes conditions that may or may not lead to a severance compensation benefit, depending on performance and change in control events. In other cases, no written contract was ratified at the start of employment, typically due to a lack of negotiating leverage.
Generally, in the absence of employment contracts and change in control agreements, the employee must rely upon potential direct or implied promises to boot strap a contractual obligation to pay severance compensation. In addition, there may exist violations of state and federal laws that provide the exact leverage to bargain for a fair and reasonable severance benefit.
A qualified employment lawyer can facilitate the negotiation process by directly bargaining with the company or advising the client behind the scenes. The latter approach is used when the employee possesses a favorable and amicable professional relationship with the employer. Direct employee negotiations also present the possibility of inadequate objectivity. The employee must discharge the emotional and political baggage, or immediately transition legal counsel directly into the negotiation.
The level of severance is variable and is a function of the company's policies, the level of the position, performance, potential liability, publicity, and previous agreements.
The time frame for negotiating severance compensation is quick. The negotiation process should take no longer than one to three weeks. Any negotiation that lasts longer is going to lead to litigation. This is a hyper intensive process that requires a great deal of time and energy by both the client and the employment attorney.
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