Breach of Contract and Severance Pay By Dan Atkerson on May 03, 2022

When employees are terminated or laid off, they sometimes negotiate a severance package that guarantees them certain pay or benefits for a limited amount of time. Severance packages are contracts, which makes them legally binding. Unfortunately, that does not prevent employers from denying workers the severance pay they are due following a layoff.

Workers in Allen, Plano, and Frisco, TX, who believe that an employer has committed a breach of contract regarding severance pay can work with employment law attorney Dan A. Atkerson to file a lawsuit and hold employers accountable for resulting damages.

What Is a Severance Package?

A severance package is a contract that outlines benefits (and certain restrictions or stipulations) that are negotiated between an employer and employee either at the time of termination, or in the event that the worker is laid off. Each severance package is unique, but they often offer benefits such as severance pay, insurance benefits, and assistance in finding another job.

Stipulations of a Severance Package

Severance packages can be extremely beneficial following a termination, but they are often only offered in exchange for certain promises or agreements. It is important that employees understand the stipulations of a severance package, because if they violate any of the agreements, the employer can deny severance pay without it being a breach of contract.

Just as the benefits of a severance package are unique, so are the stipulations. Most often, a severance package prohibits employees from disparaging or bad-mouthing their employer after termination. Severance packages may also include the following types of stipulations:

Non-compete clause - A non-compete clause prevents individuals from seeking employment in a different company within the same field for a certain amount of time
Restrictions on employment benefits - The employer may specify that the employee cannot seek unemployment benefits at the same time that they are receiving severance pay
Agreement to avoid litigation - Employees often have to agree not to sue their employer in order to receive the benefits of their severance package

Breaches of a Severance Agreement

If an employee adheres to all the stipulations of a severance package, and their employer denies them severance pay or other benefits promised in the agreement, it is a breach of contract. Even if just one aspect of the agreement is withheld, or if the amount of severance pay provided falls short of what was promised in the agreement, it is a breach of contract.

If an employer breaches a contract and denies severance pay, it is important that they are held liable. Attorney Dan A. Atkerson assists individuals in taking the legal action necessary to recover appropriate damages. Damages in a breach of contract case may include all of the promised pay and benefits that the employee has been denied.

Contact Our Law Firm

Severance packages are legal agreements, which means employers are bound to uphold them. If you have been denied pay that was promised by a severance agreement, attorney Dan A. Atkerson can help you pursue appropriate compensation. To learn more about your rights regarding a breach of contract, send us a message online, or call (214) 383-3606.