Connecticut law holds that, absent a contractual arrangement such as a collective bargaining agreement or an employment contract, employment is “at will.” This means that an employer can generally terminate an employee for any reason at any time, unless the reason is discriminatory or has otherwise been made unlawful.
By contrast, where there is an employment contract, the employer and employee must consider their respective contractual rights and obligations and how they affect an employee’s separation from employment.
Employment contracts and severance discussions may impact several issues in the event of termination. This includes restrictive covenants (such as covenants not to compete, non-solicitation, confidentiality and non-disclosure, and non-disparagement provisions). Employment contracts can also impact severance compensation, including salary and bonus and vesting of restricted shares or restricted stock units. These issues may likewise be addressed in a severance agreement.
Employees facing termination should consider the fact that employers’ approach to severance. This includes any proposed severance agreement and severance-related discussions, is most often guided and informed by the advice of experienced counsel. As such, employees should likewise consider retaining counsel when facing potential termination. For employees, the stakes in this context can be extraordinarily high, and there are numerous issues that may need to be addressed, such as:
- Severance compensation including cash and vesting issues
- Health care coverage and COBRA
- RSU and RSA vesting
- Deferred compensation
- Form U5 disclosures
- Employment References
- Non-Disclosure
- Non-Disparagement
For an individual facing severance, the complexity of these issues can be daunting. The stakes are quite high and can affect the employee’s career prospects and financial situation. Because of this, sorting through these issues may require the input of counsel.
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