This is a question that our Award Winning New York Employment Lawyer is often asked. In general, employers are not required to provide severance pay to former employees except in limited circumstances. Some of these circumstances can include the following:
NUMBER ONE: If you have an employment contract or other agreement that states you are entitled to severance pay upon separation (or alternatively, you are entitled to a notice period prior to termination). A verbal agreement can come into play in these situations but proof can be an issue. Employment agreements are typically given to executives, sales personnel, management personnel and physicians but the terms can vary widely. It is important to review the terms of your agreement carefully as severance may be paid depending on the reason for your separation – (e.g., it is paid if your employment is terminated without case but not if your employment is terminated with cause).
NUMBER TWO: If you are a member of a union and the employer is subject to the terms and conditions of a collective bargaining agreement that includes a severance pay provision;
NUMBER THREE: If the company has a severance pay plan but even then it depends on the terms of the plan. Companies can define the terms of the severance plan including who is included and which separations are covered by the plan. In general, if a severance pay plan exists, a Summary Plan Description (SPD) should be available for review. In addition, depending on the facts, you be able to argue that the company’s past practices of providing severance pay to similarly situated employees should entitle you to separation pay but these arguments can be difficult since not all of the details of the past practices are commonly known or public.
That being said, many companies provide severance pay to terminated employees in exchange for signing a general release and waiver of claims wherein you promise, among other things, not to sue the company. This release is valuable to the company. If you are presented with a severance agreement with a general release provision, you should consult an experienced employment lawyer to learn your rights and options and determine whether the agreement is reasonable under the facts surrounding your separation. If you have a strong claim against the company for sexual harassment, discrimination, retaliation, or violation of other law, the amount of the severance pay may not be reasonable.
What If I am not offered a severance package?
Absent a severance agreement, employers in New York State are required to pay you for your accrued but unused vacation time unless they have a policy to the contrary. You should also receive your wages covering up and until the last day you worked for the company. Finally, if you participated in the company’s health insurance plan, in general, the company should provide you with written notice of the last day of coverage and notice of your ability to continue coverage at your cost. Contrary to what most people believe, an employer is not required to provide a written notice explaining the reason for your termination. Finally, some claims cannot be waived in a separation agreement (e.g., right to file for unemployment insurance benefits and workers compensation injury).
This article is a short general discussion of a topic that our attorneys often discuss at greater length. You should consult an attorney regarding your specific situation as your options may vary. For example, depending on your former employer and nature of the separation, some statutes may require a notice period prior to your termination. If you would like to discuss your specific situation, contact our Award Winning Employment Law Attorney to confidentially learn your rights and options at (800) 893-9645.
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