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Are Severance Agreements Slimy Business? Is the common practice an ethical one? Our expert explains.

By Gael O'Brien

Opinions expressed by Entrepreneur contributors are their own.

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Q: We had to lay off an employee who wasn't a good fit for us. I wanted to offer her a severance package of five weeks of income, to help her and her family as she searches for a new job. But I read that I should also have the employee sign a severance agreement. I know it's common, but it feels slimy. What are the ethics here?

A: Your instinct to offer severance is compassionate and appropriate. It's also the right message to send in the marketplace: Your company treats people with respect even when things don't work out. But the accompanying agreement isn't slimy at all. It's good business.

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