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Can we require a release of legal claims in exchange for severance pay?

by on
in Employment Law,Human Resources

Q. We have to let an employee go because we are overstaffed. In the past, we have given one week of severance pay for every year of employment. We would like to start requiring those who accept severance to sign a waiver. Can we? Do we have to pay more?

A. You are smart to consider conditioning severance on a release of legal claims. A release, when drafted correctly, can provide peace of mind that a former employee won’t try to sue you down the road.

As long as your past practice isn’t something you are already contractually obligated to provide, you can start conditioning severance benefits on a release of legal claims.

Regarding the amount of payment, it depends on what your past policies and employment agreements say. If you had a policy or employment agreement that promised employees one week of severance for every year of service, then you would be legally obligated to provide those benefits and you could not obtain a valid release without adding additional severance pay to the offer.

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