Severance Agreements in Virginia
December 2, 2016
Employees in Virginia are generally considered “at will,” which means they generally can resign and/or be terminated at any time. When employment ends, an employer may offer a severance package to an employee in exchange for the employee’s waiver of rights. However, employers, in the absence of an agreement or severance policy, generally have no obligation to provide employees severance pay. If severance pay is offered, an employer will offer the employee a Severance Agreement. It is important when a severance agreement comes into consideration that an employee contact a Virginia employment lawyer for advice and/or legal representation in negotiating the agreement.
What is a Severance Agreement?
A Severance Agreement is essentially a written contract between the employee and an employer that provides the terms of the end of employment between the employer and the employee. Severance Agreements may also be offered to employees who are laid off or facing retirement or those with potential claims against the employer. In addition, depending on the circumstances, a Severance Agreement may be offered to an employee who resigns or is terminated. The Severance Agreement must have something of value (also referred to as consideration) to which the employee is not already entitled. Employers are generally required to provide an employee time to consider the Severance Agreement before signing.
An employee usually has a 21-day consideration period to accept and at least a 7-day revocation period to revoke an employer’s Severance Agreement if the employee is over 40 years of age. For a group or class of employees (i.e., two or more employees) age 40 or over, employers must provide a 45-day consideration period and at least a 7-day revocation period.
Commonly Considered Severance Terms
Items and/or terms that the employer and employee could potentially negotiate over in a Severance Agreement include, but are not limited to, some of the following:
• Financial terms, back and front pay and timing of severance payments
• Continuation of employment benefits (i.e. health, etc.)
• Describing how the employee left the employer (voluntary resignation vs. termination)
• Consequences of violating the agreement
• Unemployment compensation issues
• References (positive, neutral)
• Claims to be waived (i.e. discrimination, etc.)
• Re-hiring potential
• Scope of possible non-competition
• Preservation of trade secrets
• Recommendation letters
• Waivers of Claims
• Return of employer property
• Points of contact for reference inquiries
• Tax issues
Consult a Virgina Employment Attorney on Severance Agreements Before Signing
Severance Agreements will also include a general release or waiver that requires that the employee cannot sue his or her employer for wrongful termination or attempt to seek unemployment benefits upon the effective date of a fully executed Severance Agreement. This is one of the reasons why it is important for Virginia employees to consult with a Virginia employment lawyer prior to signing such an agreement. Generally, these types of agreements are provided to an employee on short notice which requires an employee to seek counsel as quickly as possible. An attorney is helpful in reviewing and negotiating the terms of the proposed Severance Agreement in order to best protect an employee's interests.
Before an employee signs a Severance Agreement, he or she should consult with an attorney to discuss the rights that he or she may be waiving and the terms of the Severance Agreement. If you need assistance with Severance Agreement review or negotiations or other employment matters, please contact our office at (703) 668-0070 or at www.berrylegal.com to schedule a consultation. Please also visit and like us on Facebook.