What a severance agreement actually is
A severance agreement is a contract in which you agree to release legal claims against your employer in exchange for money — and sometimes other benefits. The employer is paying you, in part, to give up your right to sue them for anything that happened during your employment. Understanding that framing helps you evaluate whether the offer is fair.
That doesn't mean you should refuse to sign. For most people in most circumstances, signing a fair severance agreement makes sense. The goal is to understand what you're trading away — and make sure the trade is worth it.
The core of every severance agreement is the release — what legal rights you're giving up. A broad release waives your right to sue for anything that happened during your employment, including potential discrimination, harassment, wage theft, or retaliation claims you may not have fully identified yet.
"Known or unknown" is the phrase to watch. You're releasing claims you haven't discovered yet — which matters significantly if you suspect there may be legal issues with your termination. If you believe you were let go due to discrimination, age, or retaliation, consult an employment attorney before signing.
Non-disparagement clauses prevent you from saying negative things about the company publicly — no critical Glassdoor reviews, no warning friends, no discussing what happened. Many are permanent and one-sided: you're bound indefinitely, but the company has no corresponding obligation.
Ask for two things: make it mutual, and add a reasonable time limit. Three to five years rather than perpetual is a reasonable ask.
Market standard for severance is typically 1–2 weeks per year of service, with senior employees often receiving more. A 10-year employee should generally expect 10–20 weeks minimum. Anything significantly below this is worth a professional counter-proposal.
Beyond the headline number, look at what else is included — or missing. COBRA health coverage continuation, equity vesting acceleration, and outplacement services are all legitimate negotiating points that many employers will agree to rather than lose.
Many severance agreements require you to return the severance payment if you breach any term. If the non-disparagement clause is vague and the clawback applies to any breach, a private conversation that's later characterized as disparaging could cost you your entire severance.
Severance agreements often include or reaffirm post-employment restrictions — non-competes, non-solicitation clauses, garden leave periods. These may be enforceable even if the underlying employment contract's restrictions were questionable, because you agreed to them again in exchange for severance.
Review any incorporated documents carefully — you may be reaffirming restrictions you thought had expired.
What to do with your 21 days
Most people use far less than their allotted review time. Here's a practical approach to the full window:
- Upload the agreement to FinePrintFix for a plain-English breakdown of every key term
- Check the severance amount against market rates for your role, tenure, and seniority level
- Identify any potential legal claims you may have — if you have concerns about discrimination or retaliation, consult an employment attorney before signing
- Write down your negotiating priorities — most people can realistically win on 1–3 terms
- Send a professional written counter-proposal — email is fine, a formal letter is better
- Take the full 21 days if you need them; the employer cannot rescind the offer during this period
If you are over 40, the 7-day revocation period after signing is a legal right you cannot waive. Even if you sign on day one, you can revoke within 7 days. For employees under 40, standard contract law applies and revocation after signing is more difficult — read carefully before you sign.
Most employers will negotiate
This is the thing most people don't know: severance is almost always negotiable. Employers offer a first draft, not a final offer. They want a clean separation — no lingering resentment, no litigation risk, no public controversy. A professional, reasonable counter-proposal is expected and usually met with at least partial agreement.
The worst outcome from negotiating professionally is that they say no to some requests and you sign the original offer. The best outcome is more money, better protections, and a cleaner exit. The risk-reward ratio strongly favors asking.
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