Severance agreements are legal contracts between an employee and an employer that specify an employment termination’s terms, such as in the case of a layoff. The agreement could also be referred to as a termination or separation agreement, along with an addendum not to sue and a release.

It is critical that every employee thoroughly understand the contract terms and all documents that make up the contract. They should be clear and specific. In particular, for employees 40 or over, the law requires that the contract be written in an understandable manner. This generally means that it should not contain long, complex sentences or technical jargon. If it is the least bit confusing, contact an attorney to seek advice. Not doing so could jeopardize your ability to negotiate the employment termination properly.

Even employees who are parting in an amicable manner should ask for guidance about signing an agreement to ensure that the terms are reasonable. There may be some terms that should be revised or added.