Guidelines for Employment Severance Agreements

Employment severance agreements may be developed for employees when there is a determination that the university will benefit. No one has an entitlement to receive an employment severance agreement.

For a number of years, the University of Illinois has entered into different types of employment severance agreements with individual members of the faculty, staff, or the academic professional ranks. In most cases, an employee has elected to retire in exchange for some consideration, an option available to units at the sole discretion of the chancellor (or designee). Employment severance agreements may be utilized only when there is a determination that the University will benefit. No one has an entitlement to receive an employment severance agreement. Following are some general guidelines to follow for these agreements.

Typically, severance agreements provide cost savings to the University or resolve a dispute. Acceptance of such an agreement by the individual must be voluntary and free from coercion. The agreement is not intended to compensate or reward an employee for past service, however outstanding such past service may have been. In order for an employment severance agreement to be valid, a benefit must flow to the campus. Such benefit (consideration) may consist of, but is not limited to, the following:

  1. A faculty tenure appointment or a civil service status appointment is relinquished by the employee;
  2. An academic professional employee relinquishes a right to notice of non-reappointment and establishes a favorable terminal date of employment; or,
  3. An employee's execution of a release of a pending or threatened suit or administrative action or as part of a settlement of such suit or action, provided the Office of the University Counsel advises that settlement of the pending or threatened suit or administrative action is in the best interest of the University.

If the severance agreement provides an option for reemployment with the University on a part-time basis after retirement, there are limits on the employee's new salary, when added to retirement benefits. If the limit is exceeded, the employee's retirement benefits may be adversely affected. If reemployment is a part of the agreement, the amount should be checked with SURS to be certain it conforms to their regulations. Guarantees of reemployment for long periods of time (i.e., longer than three years) are generally discouraged.

Employment severance agreements must be in a form approved by campus legal counsel and signed by appropriate administrative officers, including the unit executive officer, the dean, and the appropriate campus personnel officer.

Before making any written proposal (or commitment) to an employee, the executive officer must forward a description of the proposed severance agreement, outlining proposed severance costs, source of funding and other terms, as well as the financial or other benefit to the institution, through the dean to the Office of Academic Human Resources or the Staff Human Resources Office, for review and approval. If it is determined that the proposed agreement would benefit the University, administrators in the respective personnel office will work with the unit executive officer to draft an agreement containing the appropriate terms and format.

If units are interested in the possibility of negotiating a severance agreement with a member of your unit but are unsure of the elements that might go into it, call the Office of Academic Human Resources(333-6747) about faculty or academic professionals and the Staff Human Resources Office (333-3109) about staff.