Key severance agreement terms high earners should review

You receive a severance agreement after a layoff, termination or company reorganization. Your attention will likely go straight to the payment amount. But while that number is important, it is only one part of the agreement.

If you work in a high-paying profession, a severance agreement may cover more than severance pay. It may address unpaid compensation, legal claims and certain requirements that continue after you leave the company.

Clauses that deserve a closer look

The payment amount may stand out first, but other terms can be just as important. Some affect what you receive, while others affect your rights after you leave the company. The following provisions may deserve a closer look:

• Release of claims provisions: Terms that requires you to give up certain legal claims in exchange for severance pay
• Payment terms: Provisions that describe whether severance will be paid in a lump sum or through scheduled payments
• Commission and bonus provisions: Language that addresses compensation you have already earned but have not yet received
• Non-disparagement provisions: Restrictions on certain statements about a former employer
• Confidentiality requirements: Terms that limit disclosure of the agreement’s contents
• Restrictions on future business activities: Language that addresses future contact with customers, clients or coworkers

Each provision addresses a different issue. Together, they help define what you receive and what may continue after you leave the company

What high earners frequently overlook

Many employees focus on the severance payment first. For high earners, however, other forms of compensation can carry just as much financial value.

A sales professional may have a commission tied to a recent sale. A technology employee may have stock-based compensation tied to company equity. Those items may appear in different parts of the agreement, making them easier to overlook than the severance payment itself.

What the agreement may cover

The severance payment may receive the most attention, but it is only one part of the agreement. The document may also address legal claims, confidentiality requirements and other terms related to your departure from the company.

In many cases, a severance agreement does more than provide compensation. It can also define what each side agrees to as part of the separation.