When I counsel clients about the possible termination of an employee, one of the questions that always comes up is, “Should we offer this employee severance?”

The answer, as always, is: It depends.

Here are a few “do’s and don’ts” when considering whether to make an offer of pay to a departing employee.

Don’t: Offer severance without a properly drafted severance agreement. Any severance offered without an agreement is a gift. Many employers have learned this the hard way – having given a departing employee extra pay on the way out the door, only for the employee to later file a claim against the employer regardless. Severance should be offered as an exchange: the employer provides extra compensation, and the employee promises not to file (certain) claims against the employer in exchange.

Do: Consider the reason the employee has been terminated. If the employee is terminated for gross misconduct, what, as the employer, are you receiving in exchange for the offered severance? An employee who physically assaults another employee is, in all likelihood, not going to have much of a claim they were unlawfully fired; accordingly, their promise not to sue their employer isn’t going to be worth much.

Don’t: Believe that every claim can be waived. While a properly drafted severance agreement will include a waiver of the vast majority of claims an employee can make against their employer, it won’t cover all of them. An employer cannot bar an employee from making a complaint with the Equal Employment Opportunity Commission (although the agreement can bar an employee from financially benefiting from such a complaint). Severance agreements also cannot legally prohibit employees from making minimum wage or overtime claims under the Fair Labor Standards Act or from making workers’ compensation claims.

Do: Think about how the severance will be perceived amongst your workforce. No matter how many confidentiality provisions are in a severance agreement, employers should assume that other employees will learn about the arrangement. Employers must be wary of the perception that their offer of severance is starting a precedent for other employees.

Don’t: Maintain a one-size-fits-all severance policy. Regardless of how an employer may generally feel about offering severance, there is almost always going to be an exception to the rule. These decisions should be made on a case-by-case basis, rather than because the employer obligated itself in a policy.

Do: Consult with your RKW employment attorney. As discussed above, this is a determination that will have lasting ramifications, no matter which decision you as the employer ultimately make.