Unlocking Higher Revenue: How Understanding Employment Separation Agreements Impacts Your Business
One of the most frequently asked questions surrounding employment law is “do I have to sign an employment separation agreement“? If you are reading this article, the odds are that you are familiar with employment separation agreements. Employment separation agreements are contracts that provide mutual benefits for both the employer and the employee. They outline a range of different factors relating to an employee’s departure and are designed to prevent the risk of legal action from either side.
Employment separation agreements commonly include:
- Final payments to the employee
- The return of company property
- Non-defamation
- An employee’s responsibilities throughout the separation process
- Any other arrangements that will aid the departing employee and the employers interest
There is never a clear-cut agreement when it comes to employment separation agreements, and in most situations, both parties require the help of employment lawyers to negotiate the contract boundaries, especially if there is a high-level of executive, technical or industry specific knowledge within the departed employee.
The legal impact of an employment separation agreement does not only affect the employer and employee but can impact revenues in several ways:
- Sale negotiations can also be compromised for the new owners if contracts with departing employees have been breached
- Opportunities for skills transfer may be missed if a departed employee is unable to pass on techniques or insight after termination
- Liability for new owners can also be a risk if contracts and agreements with departing employees are not fairly enforced
It’s important for owners of businesses that are looking to snap up other companies that all legal aspects, including employment separation agreements are thoroughly understood.
The business reputation of your organization is impacted by how it deals with departing employees. Former employees who have previously agreed to separation arrangements still hold some responsibility for their actions after they leave the company which means that there should be a careful approach taken to this aspect of the business.
When agreements are not carefully managed, the company can find itself facing significant fines or the reputational damage that is associated with a breach of contract.
If your business finds itself in a situation where an employee has resentential legal action, it’s not only a problem for management but a disruption to the workplace. Employees that have been asked to sign new contracts or work under a new company guidelines may feel threatened or offended resulting in lower team morale, productivity and engagement.
It’s important to note that employees are not the only people that are affected by the signing of an employment separation agreement. Contractors, vendors and business partners can also be affected. Companies that fail to enforce their separation agreement can face years of negotiated contracts and revenue loss if clients refuse to work within the released separation agreement.
Although you can ask for advice from lawyers and other counsel surrounding an employment separation agreement, there is a chance that your HR representative and management teams will not understand the terms of a contract. This can lead to a dismissive attitude from the people that you trust to understand your business. An employment separation agreement can become frustrating and costly if you have a number of people who struggle to understand its importance.
One of the best ways to simplify the process is to build an onboarding and training system that takes into account employment separation agreements. When you send out employment contracts and negotiations, you should offer your teams insight into the importance of the agreement including any risks they could incur if they were to breach the employment separation agreement.
The Managed Sales Process allows you to automate potential trouble areas within your business including legal documents. Activity tracking allows you to keep a close eye on how far along a project is while also providing full visibility to all members of your team.
For more information on employment agreements, you can visit the U.S. Department of Labor.
