The amount of the severance pay may also be linked to the employer`s view of the employee`s dismissal. A staff member with a viable claim and a declared willingness to pursue that right in arbitration proceedings or litigation may have greater influence in negotiating higher severance pay. Both parties often seek the advice of an employment lawyer to assess potential claims, risks and rewards, including the cost of pursuing or defending these claims and disrupting their affairs and careers. At a time when many workers are experiencing a total loss of control, a severance agreement can "help the worker maintain some dignity," says Robert Farmer, SHRM-SCP, senior vice president of Missoula Federal Credit Union in Missoula, Mont. In addition to severance pay, separation agreements may also provide for a large number of other cash and in-kind benefits, including: for employers and the worker, it is important that the language of the dismissal and separation agreement be clear, so that all parties understand their rights and obligations under the contract. For an employee, the separation agreement is a way to negotiate and maximize his or her final compensation package. For the employer, the separation contract is a way to put an end to other disputes, prevent potential litigation and protect the business. However, severance pay is a critical element of the separation agreement. Massachusetts contract law requires that an agreement have a "consideration" or exchange of value to be enforceable. Without consideration, the contract is not a valid contract. Without severance pay, regardless of size and even if the benefits are not a cash payment, the separation contract is not applicable.
Workers aged 40 and over may be asked to accept a severance package that frees up rights to age discrimination. Under the Older Workers Protection Act, the employer must have 21 days to review the agreement. If a group of workers is involved, workers may have 45 days to review the agreement. Even if the employee accepts the severance contract, he has 7 days later to revoke the acceptance. On the other hand, wages earned are the wages received by the worker before dismissal. In addition, wages earned include wages that the worker earns from the day he challenged dismissal until the day he no longer works for the company.