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Protecting The Rights Of Employees

What is the difference between separation and severance package?

| Feb 16, 2018 | employment contracts

Employees in Rhode Island might be confused about the concepts of severance pay versus separation pay or may think that they are one and the same.

In fact, though, there is a subtle distinction. In the case of a severance contract, the employee to whom it is being offered is going to lose his or her job. The severance package usually offers an employee lump sum payments and other rewards that might be more lucrative than unemployment compensation. In exchange, the employee will waive important rights, including the right to sue his or her employer in most cases.

On the other hand, a separation agreement usually gets offered to a person who still works at a company and who may or may not get fired at a later time. The separation agreement usually marks an effort to entice the employee to voluntarily leave employment. One common type of separation agreement is an offer for early retirement, and this sort of offer may include a cash buyout or some other benefits that cover the cost of a person leaving employment early.

Severance agreements and separation agreements have different goals and deal with different legal situations, which means they are worded differently and may require different approaches when negotiating the terms of them.

In any event, though, both of these types of employment contracts may affect the rights of Rhode Island workers profoundly. Because of this, they ought to be thought over carefully, and workers need to be fully informed about what they mean and how they will affect that worker in the long run. An experienced employment attorney can prove very helpful in this respect.