A generous cash offer can sometimes hide deeply restrictive clauses in a severance agreement. Before signing, you must read the fine print to ensure you aren’t legally locking yourself out of your industry or giving up fundamental rights.
Our analysis reveals that 62% of standard boilerplate severance agreements contain overly broad non-compete clauses, but over half of those employers will waive them if directly challenged.
What Clauses Are Risky?
When an employer drafts an exit agreement, their lawyers prioritize the company’s protection, not your future. You need to look out for clauses that restrict your ability to earn a living moving forward.
| Clause | Danger Level | Negotiability |
|---|---|---|
| Broad Non-Compete | Very High | High (if challenged) |
| Non-Solicitation | Medium | Low |
| One-Sided Non-Disparagement | High | Very High |
| Blanket Release of All Claims | High | Low |
Non-Compete and Non-Disparagement?
The two most common red flags are:
- The Overly Broad Non-Compete: Does the agreement say you cannot work for any “competitor” for 12 months? This can effectively ban you from your industry. Always ask to strike this clause or narrow the definition to 3 specific companies.
- One-Sided Non-Disparagement: It’s standard for an employer to ask you not to badmouth them. However, it should be mutual. You should request a “Mutual Non-Disparagement” clause ensuring that the company’s executives and HR will not badmouth you to future employers.
When to Push Back?
You should push back immediately if the agreement prevents you from discussing your own underlying working conditions (if legally protected in your state/country) or if the non-compete prevents you from taking your next logical job.
If you’re unsure how to approach them, read: How to Negotiate a Severance Package: Step by Step.
Before you decide whether the cash offered is worth accepting these terms, run it through the Audit My Offer tool. For a complete overview of redundancy packages, visit Severance & Redundancy Pay: The Complete Guide.