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Home Q&A Forum What is a severance agreement?


Severance Agreement

North Carolina

Asked on Jun 2, 2023

What is a severance agreement?

I recently accepted a job offer from a new company, but before I start my new position the company has asked me to sign a severance agreement. I'm not familiar with this type of document and am unsure of what it entails. I'm looking to learn more about severance agreements so that I can make an informed decision.

1 Attorney answer



North Carolina

Answered 404 days ago

N'kia N.

ContractsCounsel verified

Business Lawyer
Licensed in North Carolina
Free Consultation

There are two main types of Severance Agreements. One is signed at the beginning of an employment relationship and the other is signed at the end. When a Severance Agreement is signed at the beginning of an employment relationship, "severance" is what the employer promises to pay (above and beyond the employee's regular wages) when employment terminates i.e. when the parties "sever" ties. The sum of severance pay is typically calculated by how long the employee had been employed by the company at the time of separation. Before signing this type of Severance Agreement, a prospective employee should be sure that it clearly defines all the important terms and conditions. For example, the Severance Agreement may address how long the employee must be employed to become eligible for severance pay, how long after termination the severance pay will be paid, whether severance pay will be paid in a lump sum, and what could cause the employee to forfeit severance pay.

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