Severance Agreements For Part Time Workers: Should You Use Them?

Severance agreements are a great way to ensure that your staff member fully understands the terms of their termination. By having them sign off on the document in exchange for a severance payment, you can also ensure that the employee will not take your company to court over a wrongful termination lawsuit.

But what employees should you use a severance agreement for? What about severance agreements for part time workers who do not put in as many hours at your company as full time employees?

This is an interesting question. Let’s dig in.

First, as we mentioned briefly above, a severance agreement is a legal document between an employer and an outgoing employee that goes over all of the terms and conditions of the employee’s termination.

The document is meant to protect the organization from wrongful termination lawsuits by having the employee waive their right to take the organization to court in exchange for a severance payment.

That being said, crafting a severance agreement can be tricky. We go over every detail here, and you can also download our guide below. Also, make sure that you work closely with your legal counsel to ensure you are compliant with all local, state, and federal laws as well as all of the rules laid out by the EEOC.

It’s really up to you.

We know that that doesn’t seem like an answer, but in truth the use of a severance agreement in any situation is entirely up to the organization. Many HR leaders point out that it’s always a good move to use a severance agreement when letting go someone in a protected group or someone who you think might sue for wrongful termination.

In the end, the severance agreement is protection for your company and by providing it, you can have some peace of mind knowing that you won’t be taken to court.

When it comes to severance agreements for part time workers, you must gauge how much pay you will offer the employee to sign the agreement. Will that payment be more than you are willing to spend? Will this person take you to court? These are things you have to weight internally and with the help of your legal team.

From anecdotal knowledge, it’s pretty rare for a company to offer severance pay to a part time worker, though. This is largely because part time workers come and go a lot more often than full time ones. However, some part time workers do stay at organization for an extended period of time and do expect to be compensated for their work if they are let go in a layoff.

It also depends on the event, too.

If you are laying off two part time workers, you may not give them severance because it is a one-off event. On the other hand, if you are laying off an entire store or factory that has both full time and part time employees, you should give everyone a severance agreement because there is a much higher chance that someone will take you to court or, at the very least, tarnish your reputation.

Imagine if you were a part time employee and suddenly everyone around you got laid off. You come to find that all of the full timers get severance pay while you, the part timer, doesn’t despite the fact that you’ve been trying to become a full time worker for a long time now. You’re going to be unhappy and you may take the company to court because you believe it is unfair.

Even if that employee doesn’t win the court case, why bring that attention on yourself? Just provide a severance agreement that is fair and all encompassing. As you can see, there are no black and white rules when it comes to severance. You have to use your own judgement and lean on the expertise of your board and legal team to make the proper call.

There’s another tactic, too.

Everytime there is a layoff, use a severance agreement. If this is your company policy and you enact it across the board, you know it’s 100 percent fair and you also know that any layoff event is protected by the contract.

By providing severance to all of your outgoing staff members, your employees will know they are taken care of if they happen to be the ones let go, too. Even though the severance agreement is meant to protect you, if you offer a decent severance payment, many employees will not want to sue you in the first place. Severance pay, though its purpose is to entice the employee to sign the contract, is a great thing to offer your staff because it helps them stay financially afloat during this troubling time. Don’t short them on it.

By providing a decent payment, you show that you care about the employee and that you want to help them get through the unemployment period while they hunt for a new job.

Another great way to ensure that your employee will exit your organization without holding the layoff against you is to provide them with a professional outplacement service.

As a refresher, outplacement is a service offered to employees making their exit from an organization that helps them get back to work faster by matching them up with an expert coach and providing them digital tools that help with the job hunt.

Outplacement provides a way for the employee to get back to work in a timely fashion without all of the stress. It also is a clear sign to the employee that you want them to succeed in the future and that you do truly care about their well-being, which you should.

If you couple outplacement with a decent severance package, you outgoing staff will likely not keep any ill will towards your organization, which, in today’s world, is increasingly important.

When it comes to providing severance agreements to part time workers, it’s really up to you and your legal team if you want to offer it.

However, having a blanket policy that says that you offer severance agreements to all laid off staff members might be the best way to go because it ensures that 100 percent of your terminations will not end up in court.

To make sure you have a legally compliant severance agreement, you need to work closely with your legal counsel to follow all local, state, and federal laws alongside the terms and conditions set forth by the EEOC.

If done correctly, you can protect your organization while also showing support for the recently terminated employee. For this, we recommend providing an outplacement service, which you can learn more about here:

Josh Hrala

Josh is an HR journalist and ghostwriter who's been covering outplacement and offboarding for over six years. Before pivoting to the HR world, he was a science journalist whose work can be found in Popular Science, ScienceAlert, The Huffington Post, Cracked, Modern Notion, and more.