Severance Compensation! – What’s That?

Did you leave your last employer on terms in your favor? Did you check if you had a severance compensation or a package that was to be initiated? Were you properly “paid off” in connection with your termination?

If you are like me (Lucas) there is a good chance that the last time you reviewed your employment contract was when you signed it? (I’m supposing that you have one and that you are no employed “at will”? – if you are, I’m afraid that you should just move on to our next posting – here). We can all agree that that is not good enough but then again, we are all human beings and who would have thought that we would lose our job?

Not everyone has an employment contract. That is indeed a surprise isn’t it? For example, in the US it is quite common to be employed “AT WILL” and without a contract. The typical US staff has 2 weeks…. that’s 14 days …. notice on either side, and generally no benefits that will be value-compensated when notice is given! There is precedence when it comes to severance pay but this is not governed by law in all states. That is left for a company to decide on and provide for.

If you do have one, when you are sent to the streets, your employment contract becomes one of your single most important documents. If you haven’t done so already, reading it closely line by line, word for word, is of outmost importance. Remember – you are terminated ergo you should be egoistic and make sure you leave with at least what you are entitled to. Think about:

-     Possible severance compensation (do you have a severance package?)– and what the basis for that is? (your base salary?, your gross salary?, in/excluding benefits?)

-     Is the notice period correct?

-     Are you entitled to get a full or prorated bonus payout?

-     Are you entitled to keep receiving benefits like transport allowance, housing allowance, telephone, newspaper, insurance etc.

-     Do you have a competition clause which forbids you to take employment with your single most important competitor? Is this clause valid (will you be compensated for the income loss in the period for which you are bound?)

-     Are you allowed/not allowed to take on a new job in a specific period?

-     Is your contract in line with the letter of the law?

-     Do you have any earned leave left for clearing or to be $$$ compensated?

-     Are you entitled to get any form of post-employment support e.g. through a job coach?

Above are just examples of elements to consider. There may be many more all depending on the circumstances of your employment. Make sure please to study your contract time and again and highlight elements in your favor. Remember that – usually – the terms of a dismissal are negotiable and sometimes (note I’m NOT stating always or usually), your ex-employer do want to part with you on good terms and would like to assist you to the extent they can, within reason. You should request what you are entitled to and this is where a written severance package element in your contract becomes very important.

If ever you are in doubt about anything, check the internet for support or consult with an employment lawyer. The latter is not FOC but most often worth his/her money. If you are part of an association or perhaps a union member, no doubt through this you can also seek legal assistance. Resort to this ONLY if/when all diplomatic routes have been explored.

Guukle advice: Hold on with the legal threats and try to go a long way to settle any dispute amicably. Remember that you should never shut the door when you leave a job, or part on angry terms. There is a fair chance that later in life, ways with old acquaintances will cross. Try to settle amicably and highlight, in negotiations, that you are the one who lost, not the company. This does put you in a stronger position. We advocate reason. Don’t be unreasonable. Don’t extort. It’s not worth it. Ask for what you are entitled to, be professional and calm about it and we are sure that your counter part will listen and act responsibly. Essentially, you simply ask for what is in the severance package. That’s compelling enough – the company did sign on your employment contract too! So they should be very well aware of what your severance compensation comes to and usually in good time before they decided to terminate you.

In case of dispute, try to establish precedence if you can (i.e. other ex colleagues in similar positions, how were they treated when dismissed?). This may support your case very well.

If all fails, pursuing the legal avenue is of course always an option albeit not very pleasant (and typically very time consuming, not to forget costly).

Your employer will have given you a termination letter. Make sure you provide a prompt, written and detailed response. Check their termination settlement “agreement” against the severance compensation that you are to receive. Get friends, family even perhaps co-workers to check it before you pass it on, but mind any confidentiality statement. Alternatively, if you want to play real safe, get a lawyer’s opinion. In your response be sure to include any and all relevant detail. Any “claim” that are found out or appear mystically and well into your talks on terms of separation, may not be submissible. So be comprehensive, detailed, thorough and precise.

Another piece of Guukle advice: Get everything in written form… an email is LEGALLY BINDING! Do not rely on handshakes and verbal agreements. Such may well be difficult to substantiate in court, should things turn really sour.

Additional resource here