Ensuring Residents of Chicago and Throughout Illinois
Severance agreements are binding agreements wherein an employee (usually
one terminated or laid off) pays the outgoing employee money and/or benefits
and the employee usually agrees to give up his or her legal rights to
sue the employer for any legal claims. There are often other significant
rights waived in a separation agreement.
At The Fish Law Firm, our employment attorneys’ advice regarding
severance agreements frequently depends on the nature of an employee’s
termination. For example, if there was something improper about the termination,
an employee may not want to give up their legal rights or may want to
negotiate better severance agreement benefits. If no rights were violated,
and severance was not required, it may be that you should “taken
the money and run.”
What Are the Severance Agreement Laws in Illinois?
Under Illinois law, employers usually don’t need to provide severance
to employees who are terminated or laid off. Despite this, many businesses
have implemented severance polices that award employees for their length
of service while securing a release of claims from an employee.
Severance packages often include one or more of the following:
Severance pay based on the employee’s wages,
Continuation of health insurance and other benefits at the employer’s expense
Severance packages are sometimes offered in terms of weeks based on the
length of the employee’s employment. Of course, each employer will
differ in its offer, and employees should be prepared for an offer that
may differ from that discussed here. Further, employees should keep in
mind that unless the employee has a written employment agreement that
provides for a severance upon termination, the employee has no specific
right to a severance payment and may not be offered any severance at all.
In offering a severance agreement, the goal of the employer is often to
prevent a possible lawsuit because of the termination. For the employee,
the goals are likely to maximize the amount of money obtained as part
of the severance, obtain all the benefits that she or he is entitled to
and ensure that his or her subsequent job search is not hampered by having
been terminated. The ultimate goal for both parties, however, should be
to reach a fair and equitable agreement that offers adequate protection
for both sides.
An employee who is offered a severance package should be prepared to address
Severance Amount: As discussed above, the amount offered as severance may be based on the
length of years an employee has worked at their employment. The amount
of a severance can vary greatly between companies depending on the company’s
Health Insurance: The Severance Agreement should detail the continuation of health insurance
benefits, how long such benefits will last, and due dates of any payments
the terminated employee must make payments by.
Restrictions/Waivers: Severance Agreements sometimes contain oppressive and illegal terms that
are not standard.
Re-Employment: The Agreement should set forth terms relating to whether the employee
is eligible for re-employment, when they may be considered for such re-employment,
and how they may apply for such re-employment.
Non-Disparagement Clause: A non-disparagement clause provides that neither party to the agreement
may speak negatively of the other to third parties. In Severance Agreements,
a non-disparagement clause will help employees because their employer
cannot make unfavorable comments about them to prospective employers.
On the other hand, a non-disparagement clause will help employers because
their employee cannot make unfavorable comments to other employees, clients,
Release of Claims: A severance Agreement will likely contain a comprehensive list of the
types of claims and lawsuits the employee agrees to give up upon execution
of the agreement. Typically, this claim list will be very comprehensive
and will contain almost every conceivable claim with the exception of
those claims that cannot be waived in a general release.
Sometimes, a severance agreement will also contain a non-compete agreement,
which restricts the employee from working a company in the same or similar
industry within a geographic area for a specified period of time. A non-compete
agreement can greatly restrict an employee’s ability to find a new job.
Our Naperville Attorneys Offer Comprehensive Guidance & Representation
Our firm has extensive experience in assisting clients in drafting, reviewing,
and negotiating severance agreements from both the employee’s and
the employer’s position. Our firm will assist clients in ensuring
the severance agreements are reasonable and sufficient.