Employees often presume that longevity at a company ensures that if/when they ultimately depart they will be entitled to some lump sum payment or other benefit. This is not, unfortunately, the case. Absent a contract or other written agreement requiring the employer to pay to a departing employee some benefit at the time of departure, an employer is generally free to terminate a long standing employee with little or no compensation.
That being said, it is not uncommon for employers to offer departing (particularly laid off) long term employees a severance package at the time of their departure. While the employee would like to think that the employer is doing this for the right reasons (and sometimes they are), most often the reason for the offer by the employer is to entice the departing employee to sign a severance agreement which, among other things, releases the employer from any liability for claims relating to the departing employee's employment with the company.
Severance agreements (which have been the topic of several other articles) serve a primary function of paying an employee (often an amount reflecting the term of their service) in exchange for an assurance that the employee will not sue the company. A secondary function – and one that is becoming increasingly prevalent – is obtaining from an employee an agreement not to solicit the clients of the employer after the employee departs.
An employee who has been provided with a severance agreement must consider several factors prior to signing and accepting the payment. The employee must first consider whether the circumstances giving rise to the termination are legitimate, or whether there may be something illegal going on (discrimination, retaliation). In thinking about this the employee should consider her history with the company, whether she has any history of having made complaints, whether she has recently returned from a protected medical leave, etc.
The employee must also consider to what extent she will be impacted by any sort of non-solicitation/non-compete language in the agreement. If the employee intends to start her own company after leaving, this will be important.
Finally, the employee must consider whether the amount being offered represents a fair payment for what she is being asked to give up. Sometimes, but certainly not always, employers are willing to negotiate the terms of a severance agreement. Again, the employee needs to remember that the employer wants her to sign the agreement, so depending upon the circumstances she may be in a position of bargaining power.
In the end it makes sense to speak with an attorney before executing any sort of severance agreement, regardless of the circumstances of the employee departure.