In this article, I outline 4 broad options that you could take after receiving a severance package from a former employer. Regardless of your final decision, it is in my opinion that you should always consider paying an Employment Lawyer to conduct a Severance Review (this typically costs between $400-$500). At our Consulting Firm, although we are not Employment Lawyers, we have seen plenty of severance packages from various industries – contact us for a FREE consultation session and assessment of your severance package.
Let’s get into the Advantages and Disadvantages of each of the 4 options you might take.
OPTION 1: Ignore the Severance Package
- Advantages:
- No stress from having to deal with the terms of the severance agreement, you can simply move on with your life.
- You retain your legal rights, although due to the statute of limitations, the clock is ticking on the amount of time you have to pursue matters with your former employer.
- Disadvantages:
- You do not receive any money from the severance package.
- You should only take this option if you are already independently wealthy and having to make a decision on the severance package would cause too much stress for you.
OPTION 2: Accept the Severance Package
- Advantages:
- You receive money from your former employer.
- There is very little stress associated with just accepting the agreement. However, if you are presented with a choice between receiving a lump sum payout or regular payments over a fixed time period, stress could arise from this decision-making process.
- Disadvantages:
- You give up your legal right to sue your former employer for damages. This factor largely depends on your individual employment circumstances. Were you rightfully terminated (Were you a good employee? Did your former employer terminate you for a good reason? Did your former employer violate any employment laws during the termination and if so, what was the economical value of this?) Generally speaking, if the former employer is not breaking any employment laws, it might be feasible to accept the contract.
OPTION 3: Negotiate with the Employer
- Advantages
- You could potentially receive more money and better contract terms, while avoiding a lawsuit.
- Disadvantages
- Along with the temporary stress that would arise during negotiations, there comes the risk of you making poor negotiations especially if this is done without proper consultation (this could even lead to original terms of the severance package being taken off the table).
- You would lose your legal rights to sue your former employer if you accept the renegotiated package in the end.
- You could lose your legal leverage when negotiating and saying something ‘wrong’ – it is surprisingly common to get sued for extortion within such circumstances. If severance negotiations end poorly, this may also negatively affect your reputation within the industry.
OPTION 4: File a Lawsuit
- Advantages
- You could potentially receive a lot more money, along with a sense of justice, assuming you have a strong case
- Disadvantages
- You run the risk of losing everything, and you would potentially be stuck in a longer period of stress when going through the lawsuit proceedings.
- Note that lawyer-up to sue your former employer, they lawyer up as well; make sure you have a strong case before considering this option.
Every individual’s severance package and employment circumstances are different – contact us for a FREE consultation session and assessment of your severance package.
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