Sudden job loss can leave people struggling to pay their bills. They may fall behind on mortgage payments, accrue massive credit card balances and default on their student loans.
The more skilled individuals are, the longer it may take them to secure new, comparable positions with other companies after losing their jobs without notice. Many professionals try to bridge that gap by requesting severance packages that provide temporary wages and even extend their access to benefits, such as health insurance. They may negotiate for severance when they first accept positions or when the company announces their layoff.
If a contract includes a severance agreement, then the company should provide the severance. In what cases can employers justify refusing to uphold the severance agreement?
After a termination for cause
Frequently, severance agreements include language giving employers the right to deny severance in two specific scenarios related to a termination for cause. First, the company may not need to pay severance if they terminate a worker for poor job performance. Records showing a history of substandard performance can justify the refusal to uphold the severance agreement.
Second, terminations due to disciplinary issues and misconduct can also justify a refusal to uphold severance agreements. Companies generally need to have records of write-ups and significant infractions to withhold severance pay over disciplinary issues.
Occasionally, workers may also need to negotiate to retain their severance packages during mass layoffs. Employers may use restructuring or business bankruptcy as an excuse to eliminate obligations to workers.
Reviewing the severance agreement and termination notice with an employment law attorney can help private-sector workers navigate the transition to a new position with minimal financial challenges. In some cases, employers may ultimately need to uphold its severance agreement despite initially insisting they would not provide a severance package.