Can an employer put a stipulation in a severance contract that has the employee forfeit their rights tounemployment benefits?

UPDATED: Aug 9, 2011

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Can an employer put a stipulation in a severance contract that has the employee forfeit their rights tounemployment benefits?

My employer gave me a severance document and I wanted to know what type of wording would have to be stated to stipulate that the employee would forfeit their right to unemployment benefits if the severance was accepted. Do they have the right to interfere with your unemployment benefits just because you agreed to severance or is severance just an “feel good” gesture by a company?

Asked on August 9, 2011 Virginia


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Custom and practice in the business industry is that a "severance package" given to the departing employee is essentially a gift by the employer. As you stated, it is a "feel good" gesture by the company. Employers are not required to give departing employees a severance.

An employer cannot have an employee forfeit his or her possibility of receiving unemployment benefits in exchange for a severance package. Any such agreement providing for such would be void as being against public policy and not enforceable by the employer.

The former employee depending upon the circumsatnces for his or her departure might be able to obtain unemployment benefits and would be entitled to keep the severance.



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