What Is a Severance Agreement
The prospect of facing a redundancy can understandably cause significant concern for individuals and families. If your role is affected by redundancy, you will likely be presented with a severance agreement. This document, occasionally referred to as a compromise or settlement agreement, is not just the terms for your redundancy pay, it is a full and final legal contract.
When you sign a severance agreement, you are formally waiving your right to take any future legal action against your employer regarding your employment or your dismissal. Because the rights you are giving up are so substantial, the law strongly protects employees in this scenario. For a severance agreement to be completely watertight and legally binding, you must obtain independent legal advice before putting your name on the dotted line.
Reviewing the Financial Terms and Ex Gratia Payments
A standard severance package will typically include your statutory redundancy entitlementalongside your notice pay and any built-up holiday pay. Employers frequently offer an additional sum known as an ex gratia payment to encourage you to sign the agreement.
When you bring your agreement to a solicitor, they can calculate exactly what you are legally owed to ensure the offered package is fair and accurate; and can verify that the ex gratia amount provides adequate compensation for the significant employment rights you are being asked to surrender.
Restrictive Covenants and Future Employment
The document will often contain specific clauses dictating what you can and cannot do after your employment ends. These restrictive covenants might attempt to prevent you from working for a competing business or contacting former clients for a set period.
A solicitor can examine these restrictions closely to confirm they are reasonable and will not unfairly hinder your ability to secure a new job in the local market. If a clause is overly broad, they can negotiate with your employer to have it amended or removed to protect your future career prospects.
Employer Contributions to Your Legal Fees
A common concern for employees facing redundancy is the cost of hiring a solicitor. Because independent legal advice is a strict legal requirement for a valid severance agreement, it is standard industry practice for your employer to cover this expense. The agreement itself will usually contain a clause stating that the company will pay a set contribution towards your legal fees. In the vast majority of cases this contribution fully covers the cost of our consultation so you are not left out of pocket.
Protecting Your Interests During Redundancy
Losing your job is a highly stressful experience and employers often impose tight deadlines for returning signed paperwork. You should never feel pressured into signing a complex legal document without fully understanding the implications.
At MM Halley and Sons our employment law team will sit down with you and translate the legal jargon into plain English. We will make sure that you know exactly what you are signing and that the agreement serves your best interests before you make any binding commitments.
If you have been handed a severance agreement or compromise agreement following the recent redundancy announcements, do not sign it without fully understanding your rights. Call our office to schedule an immediate consultation.
Severance Agreement and Severance Packages Ireland FAQs
Do I have to sign a severance agreement if my employer offers one?
You are under no legal obligation to sign a severance agreement. If you choose not to sign, your employer will usually process a standard redundancy, but you may forfeit any enhanced ex gratia payments offered in the agreement. We can advise you on the best course of action based on your specific circumstances.
Will my employer pay for my solicitor to review the agreement?
In almost all cases, yes. Employers typically include a clause in the agreement committing to pay a set contribution towards your legal fees. This contribution is usually sufficient to cover the cost of our independent legal advice, meaning you should not have to pay out of pocket.
Can I negotiate a better redundancy package before signing?
Yes, a severance agreement is a contract and its terms are often open to negotiation. If we review your agreement and find that the compensation does not adequately reflect your statutory rights or notice periods, we can negotiate with your employer on your behalf to secure a fairer package.
How long do I have to review the severance agreement?
Employers normally provide a timeframe for you to return the signed document, often ranging from a few days to a couple of weeks. If the deadline is too tight for you to obtain proper legal advice, we can contact your employer to request a reasonable extension on your behalf.
