You have your severance agreement in your hands. All you need to do now is sign on the dotted line. This signature marks the end of your time at the company. However, many people don't realize that it also marks the end of negotiations. Whatever is on the paper is the final agreement you are offered.

If you are getting ready to put that final signature on the paper then this article is for you. In this simple guide, we will help guide you into deciding whether or not you should sign the agreement offered.

What do I need to know before signing a severance agreement?

The first thing you should know with any agreement is what should be included to make it a legal agreement. In the case of a layoff package what you need to have on that contract includes:

• Employment dates
• Severance Pay
• Health benefits
• Retirement bonuses or incentives
• Non-compete
• Waiver claims

Each of these sections includes aspects worthy of negotiations. For example, when it comes to your severance pay you should negotiate the timeline, amount, and payment method. Some companies want to pay in a lump sum while others prefer installments. When choosing which of the two is preferable to you, check the state law on unemployment benefits.

Depending on your state, choosing one or the other could make you ineligible for unemployment. This could ultimately hurt you during the transitional period.

You should also know that the amount that is first put on your severance agreement is not final. In fact, it is often a good idea to consider a starting point. To understand how much money you should request in a counter offer, you should look at your original employment contract. Employers will often put information on that in your original contract.

One thing people often forget during this negotiation is unused paid time off. If you have not used your vacation benefits until the time of your layoff, then you deserve to be compensated for them. This is something you should bring up with the company.

When it comes to the continuation of health insurance benefits, the time of coverage is mandated by federal law. However, what is not usually specified is the level of premiums the company is required to pay. It is always a good idea to double-check this and get them to pay for a package that is equal to the one you had.

Remember that these health insurance premiums can be very important in case of an emergency, especially as you will be unemployed.

Finally, when looking at any of the legal clauses, including the non-compete and denial of liability clauses, you have to keep in mind your future. Allowing a company to issue a broad non-compete could hurt you in the long run, as you won't be able to find a new job in the field. Similarly, any denial of liability clauses should not take away from your rights.

If you have grounds to pursue legal action following your termination, contact an employment lawyer before you sign the severance package. This is the only opportunity you will have to bring a case forward against your former employer.

The most important thing to know when it comes to your severance agreement is that the terms are not final until you sign. If there is something about the layoff package that you disagree with, negotiate and try to fix it. Until you put your signature on that dotted line you have the opportunity to change things.

What are the red flags in a severance agreement?

Inadequate compensation

One of the biggest red flags in your severance package would be inadequate compensation. If you are not being offered benefits and layoff pay then you should not sign the contract. Unwillingness to negotiate your compensation would also be considered a red flag.

Pressure to sign

If the company is putting pressure on you to sign, even if you disagree with the payment then you should walk away. Better yet contact an attorney to determine what your best options are moving forward.

Broad Non-Compete Clauses

Broad non-compete clauses will block you from getting a new job after your job ends. A non-compete on its own is not a red flag, but if the geographic or duration is too long it would be considered a red flag.

Waivers and Responsibilities

Many companies use severance packages to protect themselves. This means forcing employees to sign waivers limiting their ability to sue for wrongful termination. In some cases, other rights to bring legal cases forward are also waived.

Apart from looking at what waivers you are signing, you should also consider the responsibilities. Make sure that after you leave the company you cannot be held responsible for damages.

If you want to look at what a good severance agreement looks like, you can browse our collection of layoff packages. You can also join by submitting your own package and helping others know what to be on the look out for.

What happens if I don't sign a severance agreement?

You are not required to sign a severance agreement. However, you should know that if you don't sign you cannot benefit from the terms of the agreement.

Still, there are some completely reasonable and legal reasons why you might choose not to sign.

1. Inadequate compensation

If you find that the compensation offered is too little, then you might be better off not signing the agreement. You can try to negotiate further until you have an acceptable agreement.

2. Right to sue

If you have plans to sue the company or bring a legal case forward then you might want to avoid signing a severance package. This is especially true for packages that include waivers.

3. Legal representation

If you don't want to sign until you find legal representation that would be completely normal. Make sure to find an attorney who can help you with your negotiations. They should also explain various aspects of the agreement for your benefit.

Final Thoughts

When it comes to your severance pay you need to remember that just like you are trying to gain the maximum benefit, so is the company. This is why compromise and negotiations are important. If you notice any red flags during the signing process, make sure to compare with other severance packages, and if you are still concerned, contact a lawyer. They will help you understand the agreement and choose clauses that help safeguard your future.