A Guide To Severance Agreements
What Is a Severance Agreement?
A severance agreement is a legally binding contract between an employer and an employee to terminate an employment contract. It is entered into between the parties to part ways on agreed terms. It is often referred to as a settlement agreement or compromise agreement. In simple terms, by signing a severance agreement, the employer usually agrees to pay the employee a sum of money, and in return, the employee agrees not to take legal action against the employer.
Common Uses of Severance Agreements in Dublin
Severance agreements in Dublin are often used in redundancy situations. They are also offered by employers to avoid drawn-out and costly performance or disciplinary processes. In circumstances where relations between the parties have broken down, a Severance Agreement provides a clean and mutually agreed exit for both sides.
What’s Included in a Typical Settlement Agreement?
A Severance Agreement will typically include:
- Termination payments
- An ex gratia payment (over and above statutory redundancy)
- Notice and holiday pay
- Commissions and bonuses
- Shares, stock options and other sums
In return, the employee waives their right to pursue legal claims, such as unfair dismissal, discrimination, or personal Injury claims.
Legal Advice on Severance Agreements in Ireland
A properly drafted severance agreement is legally binding. It is important that the employee receives legal advice before signing. A specialist employment solicitor in Dublin can review the agreement, explain the terms and help the employee understand their rights and options. If the employee decides not to sign, the solicitor can also advise on next steps.
Key Clauses in a Severance Agreement
Some of the most important clauses typically found in severance or compromise agreements in Ireland include:
- Date of Termination
- Reason for Termination
- Financial Compensation
- Notice Requirements
- Waiver of Claim
- Post-Employment Restrictions
- Confidentiality
- Non-Disparagement
- Return of Property
Employer Obligations Regarding Legal Fees
Employers will often insist that employees obtain legal advice before signing a severance agreement. This also protects the employer, ensuring the employee cannot later claim they didn’t understand the agreement.
In many cases, the employer will contribute towards the legal fees typically around €500.00 plus VAT.
Need Advice on a Severance Agreement in Dublin?
Contact us today for expert legal guidance. Our experienced employment solicitors will ensure you understand your rights and negotiate the best possible outcome.
