Unfortunately, COVID-pandemic restrictions have forced many employers to make tough business and economic decisions, including terminating many employees. Such employees may, for the first time, be offered a Separation Agreement (or sometimes called a Severance Agreement).

Who is entitled to a Separation Agreement?

The general rule is that, unless there is a written contract allowing termination for cause or for other specified reasons, workers are “at will employees.” This means that their employment can be terminated—either by them or by their employers—for any reason or no reason. (There are some limited exceptions to that rule, such as termination based on retaliation for the employee exercising certain protected rights, or discrimination against the employee based on certain protected classifications such as race, religion, sexual orientation, gender, age, or national origin. But that is the topic for another day.)

Employees are always entitled to be paid any accrued but unused vacation time, even if they are not offered a formal Separation Agreement. But unless the employer has in place an applicable separation plan, terminated at-will employees in Illinois will generally have no legal right to separation pay or benefits. That said, many employers offer Separation Agreements even though they are not required to in order to secure a release of potential claims from employees and avoid the unnecessary cost and headache of potential litigation.

Do you need to have an attorney review your Separation Agreement?

An employer’s formal offer of a separation agreement can be complex and, if signed, will generally be legally binding. It often contains very important personal and legal terms, including the terminated employee’s release of potential claims against the employer. Because of this, we strongly suggest that the agreement be reviewed by an attorney before the employee signs it. In fact, the Illinois Workplace Transparency Act, which went into effect on January 1, 2020, requires that any Separation Agreement include an employee’s written acknowledgement of the employee’s right to have an attorney or other representative review the agreement and advise the employee about its meaning before signing it.

No matter how things have ended at work, getting a separation agreement and signing a release comes with heavy emotions and some potential confusion, and may even seem insulting. But being full of bluster and hyperbole will earn no favors. There is significant value in bringing a Separation Agreement to an attorney as soon as possible, especially one with experience in dealing with them, such as myself and the other attorneys at L&W. Separation Agreements can be difficult to understand, but we can lay out in plain English what are the key terms of the agreement and what negotiations may be possible.

In general, when negotiating a Separation Agreement you should first determine whether there are any viable legal claims you could assert against your employer. For example, is there some evidence that you were treated differently by your employer because of your membership in a protected class? As noted above, a Separation Agreement will almost certainly include a waiver and release whereby you will forego any of these claims once the agreement is signed. In other words, if you were subject to prohibited discrimination, you will be giving up your right to sue your employer. It is therefore very important to have an attorney help you understand what rights you may have and what you are giving up by signing the agreement.

What is covered in a Separation Agreement?

Separation agreements cover a lot of ground, but improvements are possible. Key terms often fall into these categories: