Three clauses that we see in just about every severance agreement – breach/injunction, counterparts, and no additional payments are described below.
Breach / Injunction
Nearly every severance agreement we see has a “breach/injunction” clause. Employers insert this clause for a few reasons.
First of all, it sounds scary. It very specifically threatens the departing employee with a lawsuit should they breach their agreement – that’s scary (though, notably, it does not guarantee that a lawsuit will follow).
Second, a “breach/injunction” clause also puts the employee on notice of the type of relief that the employer will seek in the event of a breach – specifically, an injunction. To the extent that employers do sue departing employees, the injunction most typically sought is a restraining order prohibiting the employee from: (a) working for a competitor (for breach of non-compete), (b) soliciting employees or clients of the employer (for breach of non-solicit), and/or (c) disclosing confidential company information (for breach of non-disclosure).
Employees constantly fret over potential lawsuits for breach of a restrictive covenant. If you need help evaluating your risk, call or e-mail us any time – we do this for a flat fee.
Counterparts
A counterparts clause is pretty standard in severance agreements. It basically means that the parties to an agreement (in the case of a severance, the employee and a company representative) do not have to sign the same sheet of paper (i.e. the parties do not have to “wet ink” sign the same sheets of paper. Rather, it is adequate for one party to sign and then scan/fax, etc. the document over to be signed by the other party.
No Additional Payment
The purpose of the “no additional payment” is to cut off any claims for additional compensation. While unpaid wage claims under the FLSA cannot be waived by a private settlement agreement, most other claims for unpaid wages, bonuses, commissions, etc., can be waived by the employee with the inclusion of a “no additional payment” clause.