Generally, a signed severance agreement is a legally binding contract. Once both the employer and the departing employee have executed the document, it creates enforceable rights and obligations for both parties. This means an employer typically cannot unilaterally revoke the agreement after signing, absent specific circumstances such as fraud, duress, or a mutual mistake of fact. For instance, if an employer discovers the employee misrepresented key information during negotiations that materially affected the terms of the agreement, the employer might have grounds to challenge its validity.
The finality of a signed severance agreement provides crucial benefits to both employers and employees. For employers, it offers protection from potential future legal claims by the departing employee, allowing them to manage risk and budget accordingly. For employees, it offers certainty regarding their post-employment entitlements, such as severance pay, benefits continuation, and outplacement services, facilitating a smoother transition. The legal principles underlying contract law, including offer, acceptance, and consideration, underpin the enforceability of these agreements, reflecting a long-standing societal emphasis on honoring agreements.
