Except in a couple of situations, your employer is not required to offer you any kind of severance package. There are only a couple of situations that require severance pay and these tend to not affect that many people. Typically, a severance package is offered because an employer wants to help their employees to transition from one job to another. However, this is optional and many employers choose not to offer a severance package for whatever reason.
Alternatively, an employer may offer a severance package because they want to protect themselves against any legal recourse. When an employee agrees to receive a severance package, they also agree to not sue the company if they are fired. Because of that a company may offer severance pay because they know they won’t have to deal with any expensive lawsuits, and they know exactly what it will cost to let an employee go.
If you’re an employee a severance package may give you the peace of mind of knowing that if you’re fired, you’ll have some money available to pay the bills while you look for another job. However, the trade-off is that if you’re wrongfully fired and you believe you have a strong case, you won’t be able to take legal action to receive fair compensation for the discriminatory firing. With that in mind, let’s look at whether it makes sense to sign a severance agreement.
Should I Sign a Severance Agreement?
One of the fundamental problems with employment law is that it’s not intuitive. Whereas in many other areas of law you can act against a perceived wrongdoing, that’s not always the case when it comes to an employment issue. There are a lot of very dumb reasons that a business can fire you which might seem to provide grounds for a good case, but which are legal.
For instance, take the case of Jenny. Her employer believes that she’s stealing office supplies based on some ambiguous evidence. Rather than taking the time to figure out the whole truth, they fire Jenny. She never stole any office supplies and she can prove who did. Because of that she’s thinking about filing a lawsuit against her employer for wrongful termination. She thinks that she has a good case and a good chance of winning. Unfortunately, this isn’t the case. In North Carolina, it’s legal for the employer to do what it did. An employer can fire Jenny for incorrectly thinking that she was stealing office supplies. The situation is unfair, but unfortunately, it’s not grounds for a wrongful dismissal case. In this situation, it would make sense for Jenny to take the severance package.
Because of the intricacies of employment law, it really makes sense to contact a lawyer before you decide whether to sign a severance package agreement or not. A lawyer will be able to answer your questions and tell you whether you have grounds for a case or not. If you have a case that’s impossible to take to court it makes sense to sign the severance agreement. If there’s a good chance to win more by going to court, then it makes sense to not sign the agreement. However, unlike other cases like personal injury or workers’ comp, if you choose to file a wrongful termination claim you’ll need to pay for it out of pocket. Most lawyers will not agree to work for a percentage of any possible winnings.
Also, you should consider that litigation is not an enjoyable process, and is often very stressful and frustrating. Further, most cases do not result in the windfalls that you hear about on television. Those are only a small percentage of cases and it’s unlikely that your situation will turn out like that. In most cases, it’s better to focus on finding a new job and moving forward with your life, rather than spending years in court fighting a tough legal battle.
So even though you will most likely have to release claims to a lawsuit when you sign your severance package agreement, it usually makes sense to do so. A healthy severance package should be enough to keep you on your feet while you find another job and in some cases the severance package may end up being more than you can win in court anyways. There are cases where you have a strong basis for legal action.
If you have a written promise with your employer guaranteeing you job security, and you’re fired anyways, this can be grounds for a wrongful dismissal case. Sometimes a written promise dictates that you can only be fired with good cause or for a certain reason stated in the contract. If that’s the case and you’re fired for a reason that isn’t legally justifiable, that’s grounds for a legal case.
Other wrongful terminations must involve breaches of good faith. Some examples include fabricating a reason to fire an employee so that they can be replaced by someone who will work at lower pay. Another example is an employer repeatedly moving an employee to dangerous areas or putting them into remote locations to get them to quit voluntarily so that the employer doesn’t have to pay any severance pay. An employer may also transfer an employee or fire them so that they don’t have to pay out sales commissions.
These cases provide grounds for you to take legal action against your employer in the event of a dismissal. However, as we said earlier, if a severance package is offered it may make sense to take it. While any of the above are illegal reasons to terminate an employee, it’s usually not worth the hassle and expense of taking these cases to court. If a severance package is offered you may just want to sign it, take the money, and move onto the next stage of your life.