Waiver of Claims in a Severance Agreement: What You Give Up

The waiver — usually headed "Release of Claims" — is the clause the severance payment is buying. Everything else in a separation agreement is administration. This clause is the transaction.

It says that in exchange for the money, you give up your right to bring legal claims against the employer arising from your employment or its ending. Typically it covers claims you do not yet know about.

What a broad release covers

Standard wording reaches, at minimum:

• Wrongful or unfair dismissal
• Discrimination and harassment on every protected ground
• Unpaid wages, bonus, commission and holiday
• Breach of contract
• Whistleblowing and retaliation claims
• Personal injury claims, in some drafting
• Claims "known and unknown, suspected and unsuspected"

That last phrase is doing more work than it appears to. It waives claims for things you have not discovered yet. In some jurisdictions a specific statutory waiver is required to make that effective, which is why you will sometimes see a clause reciting a particular code section.

What generally cannot be waived

Wherever you are, a category of rights survives any release. The exact list varies, but it usually includes:

• Accrued pension and retirement entitlements
• Workers' compensation claims for workplace injury
• Unemployment benefit eligibility
• The right to file a charge with, or communicate with, a regulator — labor authorities, equal-opportunity bodies, securities regulators. You can usually still report; what you often give up is the right to a personal financial recovery from that process
• Claims arising after signature
• Enforcement of the separation agreement itself

A release drafted to bar you from talking to a regulator is a serious problem. Regulators have taken enforcement action against employers over exactly that wording. If your agreement lacks a protected-disclosure carve-out, ask for one:

Nothing in this Agreement prevents the Employee from communicating with, filing a charge with, or participating in an investigation by any government agency or regulator, or from receiving an award for information provided to such a body.

Time limits and revocation

Some jurisdictions impose minimum periods for particular waivers. In the US, waiving an age-discrimination claim under federal law requires a consideration period — longer where a group of employees is being let go — and a revocation window after signing during which you can change your mind. Waivers that do not meet those requirements can be invalid as to that claim while the rest of the agreement stands, which is a strange and unhelpful outcome for everyone.

Elsewhere, validity may depend on the employee having taken independent legal advice, and on the adviser signing a certificate. Where that is the rule, employers routinely contribute to the cost — ask, because they usually agree.

If the deadline in your agreement looks shorter than the statutory minimum, that is worth raising immediately.

What you should actually negotiate

The headline number is usually the least flexible term. These are the ones that move:

Make the release mutual. You are releasing them; ask them to release you. It costs nothing if they have no claims, and if they do, you want to know now.

Mutual non-disparagement. One-way non-disparagement is the norm in first drafts and is unreasonable. Ask for it to bind named individuals on their side, since a company cannot literally speak.

An agreed reference. Attach the wording as a schedule and name who provides it. "In accordance with company policy" is not a reference.

Extended health cover and an extended equity exercise window — both cost the employer little and can be worth more than an extra month of pay.

Release from restrictive covenants. If you are being let go, the argument for keeping you out of the market is much weaker. This is one of the most commonly granted asks and one of the least frequently requested.

Carve out claims you actually have. If you are owed commission, exclude it from the release rather than trusting that it will be paid.

Before you sign

Work out what you are already owed under your contract — notice, accrued holiday, earned commission, statutory layoff pay. If the severance offer is roughly equal to that, you are being asked to release your claims for nothing, because you were entitled to the money anyway.

FAQ

What does waiver of all claims mean?

It means you give up your right to bring legal claims against the employer relating to your employment and its ending, including claims you are not yet aware of. It is the thing the severance payment is buying.

Can I still report my employer to a regulator after signing?

Generally yes — the right to communicate with a government agency usually cannot be waived, and clauses attempting it have attracted regulator enforcement. Make sure the agreement contains an explicit carve-out saying so.

How long do I have to consider a severance agreement?

It depends on jurisdiction and circumstances, and some regimes set minimum consideration periods plus a revocation window, with longer periods for group layoffs. If the deadline you have been given looks shorter than the statutory floor, raise it before signing.

Can I negotiate a severance agreement?

Frequently, and more often on terms other than the money: extended benefits, an extended option exercise window, an agreed reference, mutual non-disparagement, and release from a non-compete. Those cost the employer little and are commonly conceded.

Should I have a lawyer review a severance agreement?

Yes, and in some jurisdictions the waiver is not valid unless you have taken independent advice. Employers routinely contribute to the cost, so ask for a contribution as part of the deal.

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