Negotiating an appropriate severance package is an important way for a successful professional to protect themselves. Frequently, white-collar professionals taking positions at new companies negotiate severance package agreements as part of the onboarding process.
Should the company later fire them or lay them off, they may receive regular payments or a lump-sum payment that is equivalent to a certain amount of wages. They may also receive ongoing benefits for a specific amount of time. Severance packages help those who are in competitive fields avoid financial devastation after an unexpected job loss.
In some cases, employers happily follow through by providing the promised severance package when a worker loses their job. Other times, employers may try to limit company losses by trying to deny the worker their severance package. Can a company that previously signed a contract promising severance pay refuse to provide a severance package after firing a worker?
The agreement may include certain caveats
It is common practice for businesses to limit their generosity when negotiating severance agreements. Frequently, employers include provisions in contracts that allow them to deny workers their severance packages in certain circumstances.
Termination for cause including misconduct and poor job performance may justify a company’s decision to deny the terminated worker their contractual severance package. However, the company needs clear documentation affirming that the termination meets the standards outlined in the initial agreement.
In some cases, it may be possible to negotiate during the termination process to preserve at least a portion of the severance package. Such negotiations frequently require the support of a legal professional who can review the contract and remain calm during communications with the company.
Other times, a worker denied their severance package may need to take legal action against the company. A lawsuit related to a severance package may result in the company fulfilling its promises begrudgingly after the courts affirm that the worker should receive severance pay as promised.
Executives and other well-compensated professionals facing termination often need help handling disputes related to their severance packages. Recognizing when employers can refuse to honor a severance agreement may help employees identify scenarios in which employers have violated the terms of their contracts and their rights.