Severance Agreement & Legal Advice

What happens for an employee when he/she decides to sign a voluntary severance agreement, and does not receive legal advice before signing the agreement between the employer and employee, and he/she subsequently takes a legal action against that employer?

An employee will likely have signed a without prejudice waiver / release document and the agreement was signed in full and final settlement of all claims present or future.  

severance agreement legal advice

This means that by signing the agreement, the employee waives his/her right to any legal claim against that employer for the legislative acts named in the agreement.

What can happen sometimes is that employee decides to sign the agreement without getting legal advice and instead with a union official’s advice.

Then after the severance agreement is signed by the parties, the employee decides to take a case against an employer, and the employer justifiably argues that the court has no jurisdiction to hear the case at all.

What an employer should do prior to an employee signing a severance agreement, is to encourage and advise the employee to seek legal advice. The employer should give the employee time to consider the agreement also.

Severance Agreement – What is ‘’Appropriate Advice’’ ?

Often in this set of circumstances, a first and substantial issue in the case, is whether the court has jurisdiction to hear the case at all, as the employee was waived his/her entitlement to take a claim.

A question arises then as to what is appropriate advice ?.

Is appropriate advice only if it comes a legally qualified person ?.

What if the employee got advice from an union official ? for example.

This can be a contested issue.

If advice was given to the employee prior to signing the severance agreement by a union official, an employer in any subsequent case can argue that the employee entered the agreement with fully informed consent and that ‘’appropriate advice’’ does not only include advice from a legal practitioner.

In was, however, stated in Hurley v the Royal Yacht Club [1997] ELR 225  where Buckley J. in the Circuit Court stated:  “I am satisfied that the applicant was entitled to be advised of his entitlements under the employment protection legislation and that any agreement or compromise should have listed the various Acts which were applicable, or at least made it clear that they had been taken into account by the employee. I am also satisfied that the applicant should have been advised in writing that he should take appropriate advice as to his rights, which presumably in this case, would have been legal advice. In the absence of such advice I find the agreement to be void.” 

Notwithstanding the above-mentioned case, if an employee gets advice prior to signing a severance agreement from a union official regarding the agreement, it can be argued by the employer this was sufficient and the union official had the benefit of an in-house legal person, for example, and hence the employee entered into the agreement with fully informed consent and that the court has no jurisdiction to hear the case.

Disclaimer – Severance Agreement & Legal Advice Article

Please be advised that the above-mentioned material is intended as an overview and as a broad out-line of the topic discussed. It should not be considered as complete and comprehensive legal advice, nor act as an appropriate substitute. Legal advice should be sought from a solicitor prior to relying on anything in this article.

Due care has been taken in the publication of this article and we do not accept legal liability as a result of reliance on any material covered in the above article.

Severance Agreement & Legal Advice

Employment Law Articles

Roger Cleary

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