“If only the employee signs the severance agreement, is the employer bound by it?”

Question: If a severance agreement was received and signed by the employee, but then not countersigned by the employer, is it binding on the employer?

O.K.
Point McKenzie, Alaska

Answer: Dear O.K.: Your question is of particular interest to me, because I ask myself that very same question perhaps once every week, when helping clients with severance matters.           

1. As a general “rule” of basic contract law, if an “offer” is presented, and then “accepted,” the “agreement” is binding on both sides. When we seek to understand legal matters, it’s often best to go back to “basics.” During the first week or so of “Contract Law” class in law school, we learn that “Offer plus Acceptance equals Binding Contract.” This is how most severance agreements are written: “To accept this offer, place your signature below and return it to me within 21 days of today’s date.” If your severance agreement has words to that effect, my “tentative” answer to your question is “Yes, both sides are bound after the employee signs the severance agreement and returns it to the employer – whether or not the employer signs it.

2. However, before concluding that the basic rule applies, we must carefully review the agreement – every word of it – to see if it might say that the basic rule does not apply here. So, for example, your severance agreement might say something like “This agreement is not binding on either the employer or the employee unless both have placed their signatures on it.” The effect of such language in the agreement would be, in effect, “The basic rule does not apply here.” My experience is that no more than 5% to 10% of severance agreements have words like that in them.  

3. By not signing the severance agreement, your employer may be playing a cynical “game”; it goes this way: “I will consider it binding if to do so is good for me, but I won’t consider it binding if it turns out I don’t need to.” I have several times seen this happen. The employer tries to have it “both ways,” or at least whichever way is more convenient for him or her. To prevent that, you may need to send him or her an email that says, in effect, “You cannot have it both ways. Either we are both bound, or neither of us is bound. I need to hear – by email – within 48 hours which way it is. If I am not bound, then I don’t have to honor any of my promises in the agreement, including the release of claims in it.”

4. If the words of the severance agreement follow the “general rule,” then I suggest you send your former employer an email asking when the counter-signed agreement will be returned to you. Whenever we can, we like to get clarity in our relations with others. If your severance agreement seems to follow the “general rule,” and does not have any words in it that say otherwise, I suggest you send your employer an email that says, in effect, “We are both bound, because the agreement constituted an ‘offer,’ and my signature constituted the ‘acceptance.’ When can I expect to receive my severance payments?” That will probably help move things along toward clarity.                                                                

O.K., these things sure should be a lot easier than they often are. But – hey – then we would have so many lawyers out of work!! (Just kidding.) Unfortunately, “people will be people,” and we all have to find ways to work together. I hope this explains things for you, so that you can help yourself get clarity in this situation.

Thanks for writing in. I hope you will tell your friends that there is a place that is “there” for them when it comes to  standing up for yourself” at work.

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Best,
Al Sklover

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