Can I Sue for Breach of Contract?

What Happens to My Severance Agreement if My Employer Breached Contract?

Losing a job is disorienting enough; add a stack of severance agreement paperwork on your desk and you’ll be quite occupied for some time! But what if your termination wasn’t just difficult — what if your employer actually broke a promise it made to you in your original employment contract when you were hired? Does that change what you’re entitled to, or does signing a severance agreement wipe the slate clean?

Filippatos PLLC handles cases for employees dealing with issues involving their severance agreements. What follows is an explanation of what a breach of contract actually is, how it can strengthen your position in severance negotiations, and what to do before you sign anything.

What Is a Breach of Contract?

A breach of contract occurs whenever one party to a valid agreement fails to perform an obligation it promised to perform. The goal of contract law isn’t to punish the breaching party — it’s to put the harmed party back in the economic position they would have occupied had the contract been honored. That’s why the standard remedy is monetary damages rather than punitive penalties.

Not every broken promise rises to the same level. A material breach goes to the heart of the agreement and can excuse the other party from its own obligations, while a partial breach is a smaller failure that still allows for damages but doesn’t unravel the whole deal. In the employment context, a breach might look like an employer ignoring a written notice-period requirement, refusing to pay a promised bonus or commission, violating the terms of an offer letter, or firing someone in a way that contradicts its own employment contract or handbook policies.

Common Ways Employers Breach Contracts at Termination

Breach issues tend to surface most clearly around termination, including:

• Wrongful termination or wrongful firing — ending employment in violation of contractual terms, anti-discrimination law, or public policy.
• Hostile workplace conditions severe enough to push an employee toward resignation, sometimes referred to as constructive discharge.
• C-suite and executive contract violations — skipping negotiated severance formulas, equity vesting terms, or change-in-control provisions.
• Unpaid earned compensation — bonuses, commissions, or accrued PTO the contract already guaranteed.

Can I Sue for Breach of Contract?

Yes. If your employer failed to honor a valid, enforceable contract, you generally have grounds to pursue a claim for damages. But severance changes the calculus. Most severance agreements include a broad release of claims — meaning that once you sign, you typically give up your right to sue for wrongful termination, breach of contract, or related claims tied to your employment. Certain rights, such as unpaid wages, remain difficult or impossible to waive, but many contract-based claims fall squarely within what a release covers.

That’s exactly why the moment before you sign is the moment that matters most.

How a Breach Gives You Leverage in Negotiations

A suspected breach isn’t just a legal grievance — it’s negotiating leverage. Career advisors at the University of Miami’s Toppel Career Center note that an employee’s ability to negotiate a stronger severance package often hinges on whether there’s potential legal exposure for the employer, and that a compelling, well-documented case can move a company off its initial offer. The Society for Human Resource Management has similarly reported that employers increasingly build formal releases into severance offers specifically to reduce their litigation risk — which means a credible breach or wrongful termination claim can directly increase what a company is willing to pay to close the door on future litigation.

In practice, that leverage can translate into a larger severance package, extended health coverage, accelerated vesting, a neutral or positive employment reference, or a narrower release that preserves claims you don’t want to give away.

Steps to Take Before You Sign

1. Don’t rush. Ask for time in writing, even if the agreement sets a deadline.
2. Document the breach. Gather your employment contract, offer letter, handbook, and any correspondence showing where the employer fell short.
3. Get a legal opinion on value. An experienced attorney can assess whether your facts support a breach of contract or wrongful termination claim — and translate that into a specific negotiating task, rather than a vague objection.
4. Negotiate before you sign, not after. Once executed, a severance agreement is a binding contract in its own right, and reopening it later is far harder than negotiating the first draft.

Talk to An Attorney Before You Sign

 

Call a New York Employment Law Attorney Now

We at Filippatos PLLC stand in proud solidarity with any and all workers facing discrimination in the workplace. If your termination followed a broken promise, hostile workplace conditions, or of a different reason we’ve mentioned above, you may be in a stronger position than the initial offer suggests. We regularly review severance packages and evaluates breach of contract and wrongful termination exposure for employees at every level, from individual contributors to C-suite executives. Contact us before you sign so we can put any leverage you have to work for you.