What Is a Severance Agreement?
Severance is a negotiation disguised as a form. The first offer is rarely the only one, and signing immediately is rarely required.
What you typically give up
In return for the payout, most severance agreements ask you to waive significant rights:
- The right to sue — a release of all claims against the employer.
- The right to discuss — sometimes non-disparagement and confidentiality terms.
- Future competition — occasionally a non-compete or non-solicit is folded in.
- Unemployment positioning — how your departure is characterized can matter.
What's often negotiable
More is negotiable than employers imply. People commonly negotiate the payout amount, continued health coverage, the departure date, a neutral reference, and removal or narrowing of non-compete and non-disparagement terms.
For workers over 40, federal law (the OWBPA) generally gives you 21 days to consider an age-claim waiver and 7 days to revoke after signing. Don't assume you must sign on the spot.
What to check before accepting
Confirm exactly what claims you're releasing and whether the amount reflects that. Look for hidden non-compete or non-disparagement clauses. Check how health insurance and unused PTO are handled, and whether the review and revocation periods apply to you. If anything is unclear or feels one-sided, that's usually a sign to negotiate, not to sign.
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Analyze your document — freeCommon questions
Do I have to sign a severance agreement right away?
Usually not. Many agreements include a review period, and for workers over 40 federal law often requires at least 21 days to consider an age-related waiver plus 7 days to revoke. Signing immediately is rarely mandatory.
Is severance pay negotiable?
Often yes. The amount, benefits continuation, departure date, references, and restrictive clauses can all be points of negotiation. The first written offer is frequently a starting position, not a final one.
What am I giving up by signing?
Almost always the right to sue your employer over your employment or termination. You may also agree to confidentiality, non-disparagement, or non-compete terms. The release language spells out exactly which claims you waive.
Will signing affect my unemployment benefits?
It can, depending on your state and how the agreement characterizes your departure and the payment. It's worth understanding how severance and the stated reason for leaving interact with your state's unemployment rules before you sign.