What's Actually in Your Severance Agreement - And What You Should Never Sign Without Knowing

The packet arrives, sometimes across a conference table, sometimes via email. Your job is ending, and now there is a document in front of you that your employer would very much like you to sign.

Before you do anything else: slow down.

Not because the offer is necessarily bad. Not because your employer is necessarily acting in bad faith. But because this document was drafted by lawyers who work for them, and you are about to make a decision that could affect your financial life for months and your legal rights permanently. You are allowed to take your time.

What a Severance Agreement Actually Is

A severance agreement is not a gift. It is a transaction.

Your employer is offering you money (and sometimes other benefits) in exchange for something they want: your signature on a release of claims. That release is the part buried in the middle of the document, written in language that was designed not to be read carefully. It typically means you are agreeing not to sue the company (for things like wrongful termination, discrimination, unpaid wages, or anything else connected to your employment).

They want that release. That is why the severance exists.

This doesn't make the offer malicious. Companies have legal exposure when they end someone's employment, and they are trying to close it. That's a business transaction, not a personal act. Understanding it that way is actually useful, because it means you have leverage you probably don't know you have.

The First Thing to Look For

Before you get to the number, find the release of claims clause. Read it carefully. Understand what you are giving up.

If you believe your termination was connected to a protected characteristic like your gender, race, age, disability, pregnancy, or another category protected under federal or state law, that release has a different weight. You may be signing away a meaningful legal claim. That conversation needs to happen with an employment attorney before you put your name on anything.

If you are 40 or older, federal law actually requires your employer to give you at least 21 days to consider the agreement, and 7 days to revoke it after signing. This is not a courtesy. It is a legal requirement. If you are being pressured to sign faster than that, the pressure itself is worth noting.

What Else Is Negotiable (More Than You Think)

Most people focus on the dollar amount and treat everything else as fixed. That's a mistake.

Severance agreements often contain other terms worth examining, and in some cases, worth pushing back on. Non-disparagement clauses that restrict what you can say about your experience. Non-compete provisions that could limit where you work next. What your former employer will say when someone calls for a reference. Whether COBRA health coverage is being extended, or whether you're being left to figure out your own coverage starting next month. Unvested equity or stock options that may have an expiration clock tied to your last day.

None of these are automatically set in stone. Employers expect some negotiation. The worst they can say is no, and they are not going to rescind the offer because you asked a question.

The Hard Truth About the Number

The severance amount you're offered is often the opening number, the one that works if you don't push back.

Most standard formulas run one to two weeks of pay per year of service. That's a starting point, not a ceiling. Your tenure, your role, the circumstances of your departure, the company's legal exposure... all of these factor into how much flexibility actually exists. You don't have to know how to negotiate to benefit from simply not signing on day one.

Acknowledging the Feelings Before Signing Severance

What to know before signing the severance agreement is equally as important as managing the feelings. The shame spiral that hits when your job ends has a way of making you want the whole thing to be over. Just sign it, get the money, get out. I understand that impulse completely.

But the window between receiving a severance offer and signing it is one of the few moments of genuine leverage you will have in this process. Once you sign, that window closes, along with your options. You can't un-waive a legal claim. You can't renegotiate a clause you already agreed to.

You don't have to fight. You don't have to threaten to sue anyone. You just have to slow down long enough to know what you're signing, ask a question or two, and, if anything feels off, talk to someone who can read it with you.

The document was drafted to protect them. You are allowed to take a day to protect yourself.

---

Navigating a severance and not sure what you're looking at? That's exactly the kind of thing I work through with clients, both the legal side and the human side. Book a free intro call here.