A severance agreement is a contract that also sets the conditions of your job search: how long you have to decide, which companies you may approach, what your former employer will say about you, and how you describe the exit. This essay is not legal advice. It lists what exists, so you know what to put to an employment lawyer.
The temptation after an exit is to treat the agreement as paperwork and the search as the real work. The two are linked. A restrictive covenant can remove companies from a target list. A vague reference line becomes what recruiters hear. Whether a signed agreement can be undone is a question for an employment lawyer. Rules differ by country, and within countries by state or province, so each point below ends in a question for a lawyer in your jurisdiction rather than an answer.
Start with the clock
The first thing to establish is the date by which you must decide, and whether it can move.
As of 5 October 2026, in the United States, the Older Workers Benefit Protection Act (OWBPA) sets conditions for a waiver of age discrimination claims by anyone aged 40 or over. As the Equal Employment Opportunity Commission (EEOC) sets them out, the waiver must be written in plain language, must refer to the Age Discrimination in Employment Act by name, must advise you in writing to consult an attorney, and must give you at least 21 days to consider it, running from the employer's final offer. If the employer makes material changes to that offer, the 21 days start again. In a group exit programme, meaning you are laid off at the same time as at least one other person, the period is at least 45 days, and the employer must also give written disclosures about who was and was not selected. After you sign, you have 7 days to revoke, and the EEOC says neither side can change or waive that period. You can ask for more time, and the EEOC advises putting the request in writing (U.S. EEOC technical assistance document, issued 15 July 2009; read on 5 October 2026).
The same guidance states that the waiver must be supported by something of value beyond what you are already owed, and that it cannot waive claims arising after you sign. It also says no agreement can limit your right to take part in an EEOC investigation or proceeding.
Outside the United States the position is different, and the periods above do not carry across. In the UK, Acas says a settlement agreement must be in writing, must relate to specific claims, and is valid only if the worker has had advice from a relevant independent adviser, who must be named in it. Acas describes agreements as reached through discussion and negotiation (Acas, read on 5 October 2026). This essay did not open an authoritative source for a statutory review period in the UK or Canada, so it states none.
In Canada, the government of Ontario describes the termination and severance rules in its Employment Standards Act as minimum requirements and notes that some employees have greater entitlements under common law. Employment standards differ by province (Government of Ontario, updated 23 July 2026), and federally regulated employers fall under the Canada Labour Code, which has its own notice and severance rules (Employment and Social Development Canada, updated 23 July 2026).
Questions for the lawyer:
- Which law governs this agreement and my claims, and what is my last day to decide?
- Is this an individual or a group exit, and does that change the period?
- Can I get a written extension, and is my request in writing?
What an agreement can cover
The EEOC's description of a severance agreement is plain: a contract that specifies the terms of the termination, with numbered terms for the date of termination, payments, benefits, references, return of company property and the release of claims. It also observes that it is common for senior-level executives to negotiate severance provisions when initially hired, which makes the employment contract a document to put to the lawyer. The table below is a list of items to ask about, not a claim about what any employer will agree to.
| Item | What to ask the lawyer |
|---|---|
| Cash | Is it a lump sum or paid over time, and what ends the payments, for example a new job? |
| Benefits continuation | How long do health and other cover continue, and who pays for them? |
| Equity | How are unvested options or shares treated, what is the exercise window, and what are the tax effects? |
| Bonus | Is any current or past-year bonus earned, pro-rated or forfeited? |
| Outplacement | Is it offered, from whom, and can it be taken as a service of your choosing? |
| Reference and announcement | Who will confirm your dates and role, and what exactly will the announcement say? |
| Non-disparagement | Does it bind both sides, and what are the exceptions? |
| Confidentiality | What does it cover, and what may you say in an interview? |
| Restrictive covenants | What do they prevent, for how long, where, and are they enforceable where you live? |
| Account of the departure | Can the parties agree a short factual statement and a common reply? |
The tax effects of cash, equity and benefits belong with a tax adviser as well as the lawyer. Outplacement is a service some employers offer; the handbook explains what outplacement is and how it differs from Reverse Recruiting.
Why non-compete and non-solicit terms matter to the target list
A target list is the set of companies and decision-makers you plan to approach. A non-compete clause can make part of that list off limits for a period. A non-solicit clause can bar you from approaching your former employer's customers or staff. Both change the list before the search starts, which is why they come before the résumé in the first 30 days after a layoff.
The law on this is changing and varies by place. The sources opened for this essay, each dated below, show the following.
United States, federal. The Federal Trade Commission's rule banning most non-competes was set aside by a federal district court on 20 August 2024. On 5 September 2025 the FTC voted 3 to 1 to dismiss its appeal and accept that outcome (FTC, 2025). The FTC removed the rule from the Code of Federal Regulations effective 12 February 2026 (Federal Register, 2026). In June 2026 the FTC approved a final consent order against one pest-control company requiring it to stop enforcing non-competes against thousands of workers (FTC, 2026). That order concerns one company's broad non-competes across its workforce. It is not a rule about executive agreements.
United States, states. State law now does the work. California's Business and Professions Code section 16600 voids contracts restraining a person from a lawful profession, trade or business, with statutory exceptions (California Legislature, text read on 5 October 2026). A law firm summary dated 8 April 2026 lists several states that ban non-competes, others that apply income thresholds, and further bills then pending (UB Greensfelder, 8 April 2026). The right question is which state's law governs your agreement, since employers often choose one in the contract.
Canada. Ontario's Employment Standards Act prohibits non-compete agreements between employers and employees from 25 October 2021, but exempts executives, defined by title to include chief executive, financial, operating, information, legal and human resources officers, and "any other chief executive position". Non-solicit and confidentiality agreements are not covered by the prohibition (Government of Ontario, page updated 8 July 2024, read on 5 October 2026). If you are an executive, this ban may not protect you.
United Kingdom. The UK government published a working paper on reforming non-compete clauses on 26 November 2025, with responses closing on 18 February 2026. It was framed as supporting discussion on whether and how to proceed, not as a formal consultation, and the page opened for this essay does not record an outcome (GOV.UK, page updated 19 February 2026, read on 5 October 2026). Ask the lawyer about the law as it applies to your contract today.
Questions for the lawyer: which of these clauses apply to me, are they enforceable in the place the contract says, and can the agreement narrow the list to named competitors, or shorten the period, in return for the release I am giving?
The agreed account of the departure
The last term to settle is the one the market hears. A short, factual account that both sides accept does three things for the search. It gives recruiters and boards one sentence to repeat. It gives your references a version to match. And it tells you what you can say without breaching a confidentiality or non-disparagement clause.
Three questions for the lawyer: what will the company say internally and externally, what will it say when a recruiter calls for a reference, and what are you to say in reply? Do these read as the same event? The lawyer can tell you what the agreement may require you to say and what it forbids. How the account is used in the search itself is covered in the essay on executive job search after a layoff, and the later conversations with recruiters in your first call with a retained recruiter.
Questions for the lawyer, in order
- What is the deadline, and can it be extended in writing?
- Will you read the agreement together with my original employment contract?
- Which restrictive covenants apply, and which companies would they affect?
- What are the terms and tax effects of the cash, equity, bonus and benefits, and which parts need a tax adviser?
- What will the reference, the announcement and the departure account say?
- When would I sign, and when does any revocation period end?
- What does the agreement leave me free to do in the search itself? The quiet conversations that follow are described in the first 30 days. Senior roles are sometimes filled without a public posting, and nobody has measured how often; the evidence review sets out what is known.
Frequently Asked Questions
How long do I have to sign a severance agreement?
It depends on the law that applies. In the United States, for a person aged 40 or over, the EEOC says the employer must give at least 21 days to consider a waiver of age claims, or at least 45 days in a group exit program, plus 7 days to revoke after signing. Rules in the UK and Canada differ, so ask a lawyer in your jurisdiction.
Can I negotiate a severance package?
Whether there is anything to negotiate depends on the employer and the law that applies. Acas describes UK settlement agreements as reached through discussion and negotiation. The EEOC notes that it is common for senior-level executives to negotiate severance provisions when initially hired, which is a different point from negotiating at exit. Cash is only one term: benefits, equity, references, the announcement and restrictive covenants are others to ask the lawyer about.
Is a non-compete enforceable after I am laid off?
That depends on where you live and where the contract is governed. The federal rule in the United States was set aside by a court in 2024 and removed from the federal regulations in 2026, so state law matters, and it varies from near-total bans to income thresholds to enforcement. Ontario exempts executives from its ban. Ask a lawyer before you sign or begin approaching competitors.
Should I tell recruiters I was laid off?
What you say about the exit is a question for your employment lawyer, along with any agreed account of the departure and the agreement's confidentiality and non-disparagement terms. Ask what the company's reference line will say, so that it can be compared with what you and your references say.
Does severance affect how I describe my status on LinkedIn?
The end date and the agreed announcement set what you can accurately say, and the agreement may restrict what you say about the departure. Ask the lawyer to confirm the official end date and any wording the company expects before you change your profile or announce a search.
