Out of nowhere, your Texas employer called you into a meeting room and announced that the company was letting you go. Maybe you expected it, or maybe you were blindsided. Perhaps you can even connect your termination with a negative event, such as a complaint you registered with HR. Whatever led to your firing, if your boss offers you a severance package, you should understand the reasons behind it and your obligations if you accept it.
The law does not require your company to offer severance packages to terminated employees, but some companies find that it is a useful bargaining tool. Even though there is no legal precedent for your employer to give you a package when you leave, you want to make sure that you do not sign away important rights when you accept it.
What is a severance package?
A severance package is a sum of money, typically a lump sum, to tide an employee over until he or she finds another job. This may be particularly important if you have signed a non-compete agreement and expect to have difficulty finding work after your termination. If your employment contract does not contain a non-compete clause, your employer may make signing one a condition for your severance.
The amount of money offered is not definite, but many companies offer about two weeks' pay for each year the company employed you. Union workers and hourly employees may follow different formulas. Your employer may also include other benefits, such as health care coverage for a limited time and employment counseling.
Where's the catch?
Your boss isn't handing over hundreds or thousands of dollars because he or she feels sorry that you lost your job. Your boss wants something in return -- typically, your signature on a document releasing the company from any legal liability for your termination. In other words, if you accept the severance, you relinquish your right to sue for wrongful termination. Your boss may also ask you to forfeit any rights to legal action for discrimination, harassment or other actions, so you should weigh the factors carefully.
Other things may affect your severance package, such as your employment agreement, the reason for your termination and the company's policy. You may also have the option of negotiating the terms of the severance. To ensure your employer is offering a fair package that does not hinder your rights to seek compensation in other ways, it is beneficial to ask an attorney to review the details of the offer.