What Are the Basics of a Severance Agreement?

The basics of a severance agreement include the timing, announcements, and monetary and non-monetary considerations, such as non-disparagement, reference-ability, and non-competes. An experienced executive compensation disputes lawyer at The Noble Law can help you with your separation agreement at the beginning or end of employment. We know how important it is that you receive a fair severance agreement, and we will advocate for you in the name of those rights. 

We represent our clients in a professional and classy manner that helps reduce the anxiety of an already stressful situation. Contact us for a free consultation—we serve all of North and South Carolina.

What is a Severance Agreement?

A severance agreement is a contract that you may be asked to sign. Usually, it contains the amount of your severance pay and other benefits. This is offered by your employer in exchange for your agreement to release any claims against them. In addition, it includes language waiving your right to sue the employer. By law, this waiver of the right to sue must be written in plain English. The employer must also inform you in writing that you may consult an attorney before waiving the right to sue.

Keep in mind that employers cannot waive specific claims in a severance agreement. These include the following:

  • Workers’ compensation claims
  • Age discrimination in employment claims
  • Minimum wage and overtime claims
  • Unemployment insurance claims

Understanding At-Will Employment and How It Relates to Severance

North Carolina and South Carolina are both at-will states regarding employment. That means an employer may terminate a worker’s employment for any reason, with or without case. On the other hand, an employee may also leave without giving the employer notice.

There is an exception to at-will employee relationship when the termination is based on a federally protected category.

That exception involves termination based on the following:

  • Race
  • Age
  • Gender
  • Sexual orientation
  • Religion  
  • National origin

Do I have a wrongful termination case?

Because North and South Carolina are at-will employment states, pursuing a wrongful termination case is challenging–unless your employer violated state or federal law regarding discrimination or breached an employment contract. For example, you may have a claim if the contract states you are employed for a specified time, and your employer terminated you before that end date. The same applies if you believe you were terminated after participating in protected activities, such as filing a workers’ compensation claim after a job-related injury or taking leave under the Family Medical Leave Act. A North Carolina wrongful termination lawyer at The Noble Law can determine if your case qualifies.  

What Is Included in a Typical Severance Package?

Many employers offer a severance package to reduce wrongful termination lawsuits. Further, unless your union contract or company policy specifies an amount, there is no set amount for severance pay. Issues generally addressed in a severance package include:


Financial compensation based on wages is standard. Employers might offer employees up to two weeks’ pay for each year of service. For instance, if you worked for the company for ten years and made $1,500 per week, you might receive a $30,000 severance package.


If your employer offers group benefits to 20 or more employees, it must provide the option for Consolidated Omnibus Budget Reconciliation Act (COBRA) continued coverage via the group insurance plan. In North Carolina, eligible individuals may continue coverage on the employer health plan for up to 18 months. However, they must pay for full coverage. Under certain circumstances, COBRA eligibility may continue for up to 36 months.

Am I Eligible for Unemployment?

You may be able to apply for unemployment after your termination. In most cases, severance pay is not considered wages when:

  • Severance pay followed company policy.
  • The agreement states that severance pay is for a specific reason, such as job elimination or recognition of your past service.
  • The plan is available to a class of employees.
  • The severance pay is designed to supplement unemployment insurance.

While not a requirement, some employers may include job counseling or other transitional help for those they terminated.

Know What You Are Signing

It is critical to know the particulars of any agreement you sign and its impact on you. That is why you should read the documents in the severance package carefully and make sure you understand it. Retaining legal counsel who can review the severance agreement and protect your interests is even more important.

Can I refuse to sign a severance agreement?

You are not required to sign a severance agreement. It is possible to negotiate for better terms, such as two weeks instead of one week’s pay for every year of employment. If you are considering filing a lawsuit, you should not sign a severance agreement but consult an attorney. Finally, by law, employees over 40 must have at least 21 days to sign the agreement. That gives you time to schedule a consultation with an employment lawyer.

Contact Us at The Noble Law for a Free Consultation

In severance agreements, negotiable terms vary by the situation. As noted, they can include the amount paid, whether paid as a lump sum or over time, types of benefits to be paid or extended, confidentiality requirements, non-compete clauses, and a release of claims against the company.

As you negotiate these complexities, it’s crucial to have an employment attorney in your corner–serving as your advocate. At The Noble Law, we are a women-owned practice and a recognized leader in employment law. Although our office is headquartered in Research Triangle Park, we serve clients throughout North and South Carolina.

We look forward to hearing from you.

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