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Employment

Should I Sign a Severance Agreement?

By FixMyContractLast updated Sep 25, 20262 min read

A severance agreement usually trades money for giving up claims against the employer. Before signing, check what you receive, what you give up, and any new restrictions such as non-compete or non-disparagement.

What to check

  • The payment and when it arrives
  • The release (which claims you give up)
  • Non-compete, non-solicit and non-disparagement terms
  • What happens to benefits and equity

Time to decide

In the US, employees 40 or older who give up age-discrimination claims are generally given at least 21 days to consider the agreement and 7 days to revoke after signing (45 days to consider in group layoffs).

Asking for changes

Severance terms are sometimes negotiable, especially the amount, the timing and the restrictions.

Clauses that are easy to miss

  • A release wider than the job itself, for example covering claims against related companies.
  • Confidentiality about the agreement itself.
  • A no-rehire clause.
  • Repayment of the severance if you break a term.
  • A cooperation clause asking you to help in future disputes.

Questions to ask before you sign

  • When does the payment arrive — one lump sum or continued salary?
  • Does health coverage continue, and who pays for it?
  • What happens to unvested equity or a pending bonus?
  • What will the company confirm to future employers?

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This is information, not legal advice.

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