Separation agreements usually provide for payments going beyond what the employer already owes to the outgoing worker. This compensation is called "severance pay" and can be issued in a lump sum or for weeks or months. Since separation agreements are legal documents, one might think that the question of their enforceability would be simple: if they have been properly drawn up and executed, both parties are bound by their provisions. Benjamin E. Widener, a shareholder of Lawrenceville-based law firm Stark & Stark, agrees. If a separation agreement is not required by a formal employment contract or severance pay plan, the company should consider offering separation contracts in return for the employee`s release of all rights, even if those rights do not yet exist. "It offers protection and isolation to the employer from lawsuits lightly (or not) filed by angry former employees," he said. At the end of the day, Widener said, "It`s really on a case-by-case basis and it depends on the facts and circumstances of the specific situation." Employers, he says, should consult with their lawyers to determine the appropriate action or strategy when an employee refuses to cooperate or sign the agreement. Some employers may want to limit how outgoing workers can behave in the future by using "restrictive agreements", such as non-competition, non-publicity, secrecy and non-disclaimers.
This is a critical limit on how the employer can behave in the months or years following the termination of the employment contract: an employer must pay the worker wages earned, accumulated but unused leave (if he has such a policy) and usual expenses incurred before separation (again subject to his policy), even if the worker does not sign a separation agreement. Ultimately, there are separation agreements to protect companies from litigation from former employees, so you may be wondering what`s in it for workers. Typically, in exchange for "waiving their rights" (such as giving up your right to bring an action in the future), workers receive some sort of compensation in the form of benefits or cash.