Severance Pay Guaranteed

Whether or not a company will offer its employees severance pay is often based on the company’s culture and policies. However, there are some situations when severance pay is a given, such as when an employee’s job ends due to company restructuring, downsizing or a corporate decision. In such cases, severance pay is offered to help soften the blow of losing their job and give them a financial cushion as they search for a new one.

If an employer agrees to provide a severance package in a contract, it is legally obligated to honor that agreement. But, the company may change its mind if it believes that offering severance is no longer in its best interest. In that case, an experienced workplace attorney can evaluate the contract and determine if the company’s change of heart is justified.

An employment law expert at Muse explains that severance pay is a form of compensation an employer gives to their employees upon leaving their jobs. The payment can vary, but it typically includes salary through your last day and any unused vacation and sick days, depending on your company’s policy. Some companies also include a bonus that isn’t part of an employee’s base salary or performance-based bonuses.

Is Severance Pay Guaranteed?

Severance pay is not a guarantee, even when it’s included in an employment contract. While many employers will choose to offer severance packages as a way to keep their employees happy, they do not have to. An employer can fire someone and not pay them severance, for example, if they were terrible at their job and caused the company to sustain major losses.

Companies that are preparing to lay off large numbers of workers are required to give their employees 60 days notice under the Worker Adjustment and Retraining Notification Act. In those cases, an employee is entitled to full pay while they’re looking for a new job and may receive severance pay lawyer in addition to unemployment benefits.

The only situations in which an employer is legally obligated to provide severance pay is when it’s part of an employment contract or if it violates the Worker Adjustment and Retraining Notification (WARN) Act. Otherwise, an employer can decide not to provide severance pay and simply terminate their relationship.

While it is rare for a company to force an employee to sign a severance agreement, they can try to coerce them into signing by using intimidation tactics or fear of retaliation. If an employer tries to force you to sign a severance agreement, it is important to contact an experienced workplace lawyer right away. The attorney can review the agreement to ensure it does not contain terms that are in violation of federal and state laws. For example, the attorney can check to see if your employer’s severance package includes a non-compete or non-disparagement clause. If it does, your lawyer may be able to file a claim against them for breach of contract. An experienced workplace attorney could potentially recover a significant amount of money for you.