Severance Offered

[truthbtold]

What is the name of your state (only U.S. law)? New York

Hi. My company's business is struggling and they have offered a buyout package to ALL employees. They want over 40 to accept it. If they don't succeed, layoffs will follow. Little acceptance is expected. This is a one-size-fits-all package that must be signed by 12/21. The financial portion is 2 weeks per year worked, maximum 26 weeks. We were each given paparwork with our figures. They will pay for unused vacation under separate cover. If accepted, there is a 7-day revocation period by either party. At the end of the period, the employee will be told the final day of work. I believe that in most cases this will be 12/29 (assuming a 12/21 signing).

I want to point out that a sweet offer was made in '08 for employees eligible only if certain criteria were met. The goal was 20, the offer was 2 weeks per year worked with NO MAX, and only 8 accepted. I was NOT eligible for that offer.

I'm 44 and the job is a dead end street. I believe my only career choice is to accept the buyout and move on. However, this offer only gives me credit for 13 of my 20 years with the company. I'm not liking that part, especially since I was not eligible for the sweeter offer of '08.

My questions are:
1) How likely is it that I may be able to negotiate a more palatable 40 weeks of severance pay? I'm thinking that since it's my first offer, and that since acceptance will be low, that maybe I have a shot? Also, I'm thinking it SHOULD be better for the company to offer me a better package voluntarily and confidentially with no unemployment compensation, than to lay someone else off, which will cause that employee distress, open the company up to a possible lawsuit, and result in unemployment compensation.
2) Is it recommended that I put my "counter-offer" in writing?
3) I acquire 4 weeks vacation at the conclusion of 2009. I expect to be let go 12/29. How likely is it that those 4 weeks will be included in that check under separate cover? Shouldn't I negotiate that as well? After all, to lose 4 weeks vacation pay by 2 days would be upsetting.
4) I get a Christmas bonus on 12/23. Should I assume that I'll automatically still get it, or should that be included in my letter?

Thanks so much in advance for any opinions and suggestions!What is the name of your state (only U.S. law)?

 

[eerelations]

1) Given that your employer isn't required to offer you a severance package at all, combined with the fact that 26 weeks' pay is very very generous in today's market, I think it's probably unlikely that your employer will be open to negotiations on this. Whatever you do, keep in mind that your employer may legally fire you, without any severance pay, just for asking about negotiations.

Whatever "sweet deal" employees got in the past has no legal bearing on what kind of a deal, if any, your employer is legally required to offer you.

2) All communications like this should be in writing. However, before you start writing, re-read the sentence above that starts with "Whatever you do..."

3) it's unlikely you'll get that four weeks' vacation pay. Your employer is not legally required to give it to you.

4) Your employer is not legally required to pay you a Chrsitmas bonus. If you want to get that bonus, all you can do is ask your boss if you'll get it. This question need not be in writing.

 

[truthbtold]

Thanks, eerelations, for your response! Lots of good points...

I will heed your advice on item 4...the Christmas bonus. I will assume that the company will do right and that it's not in jeopardy.

I'll omit discission of item 3...the 4 weeks vacation pay. As you say, it's unlikely. While they don't legally have to pay it, they also don't legally have to give severance, so I thought it might be worth negotiating.

Great advice on item 2...I will put it in writing.

Item 1 is true indeed...the offer in TODAY'S market is likely not all that bad.

But this company would really rather give voluntary buyouts than start laying people off. This company had a WRITTEN POLICY, believe it or not, of NO LAYOFFS to any full-time employees AS LONG AS THE PRODUCTS WERE STILL BEING PRODUCED. The company recently gave 6-months notice that the "pledge" is ending (production hasn't), and layoffs would happen. Most employees are well over 40 and feeling distressed about this. This is why I'm thinking that they'd much rather negotiate with a willing employee than lay off a non-willing one and open a can of worms.

Curious, too, about the prospect of "getting fired" just for wanting to "discuss". Everything I've read on websites brings forth the fact that severance agreements are open to discussion. In fact, some sites bring the point that a positive "letter of reference" should be included in negotiations...something that is missing from the present agreement.

So that was a surprise! You got my attention, because I know you have experience with this. But it IS the first time I've heard that...

 

[ecmst12]

They might not fire you just for wanting to negotiate but they might just let you keep working and offer the buyout to someone who will accept what they are offering without argument.

 

[truthbtold]

True. Thanks so much for your input. But the Company has offered the buyout to every full-time employee, they need to reduce staff by 20% by year end, and they are not getting cooperation.

More and more, I don't think I have anything to lose. I think the worst that can happen is they say "Take it or leave it", and I become first in the lay-off line if I don't take it because I expressed interest. Halfway out the door, so to speak. Which wouldn't be that bad. There are rumors of a smaller package, but I'd also be "unemployment eligible". I could also sue (but let's not get into it).

However, they really need this. Business is bad. And companies are helped a lot when an employee leaves voluntarily. That's why they offer severance...

 

[eerelations]

Of course severance pay offers may be open to negotiation! However, employers aren't legally required to negotiate severance offers. And in an at-will situation (like yours), employers may fire people who say they want to negotiate their severance offers. This is perfectly legal, and it happens - more frequently than you seem to think. So again, be careful, and if you are fired (sans severance pay) for trying to up the ante, there's nothing you can do about it. You won't even be able to say we didn't warn you.

 

[cbg]

Tell me, what incentive does the company have to offer you additional severance? What value are you offering that would make it worth their while to "negotiate" something more? In other words, what are YOU planning to offer THEM? And if you're not offering anything, why should they negotiate at all?

 

[truthbtold]

Thanks for the input!

In response to eerelations...We DO KNOW that companies are not legally required to offer severance or to negotiate severance...This company's history is to fire for cause only. I may get laid-off down the road, but I don't think I'll get fired for politely negotiating the terms of their agreement. But, again, you got my attention. I am erring on the side of caution as I prepare my document.

cbg...Companies offer severance in exchange for any right (real or imaginary) to bring a legal claim, a promise to not say anything disparaging whatsoever (public perception is important), and the right to unemployment compensation. Companies customarily are very willing to pay to receive this agreement. The incentive for additional severance is the fact that the employees are not lining up to accept the buyout. The company WANTS employees to accept on a voluntary basis. The company would prefer that employees turn in the agreement and leave happily, as opposed to the possible risks associated with an employee leaving unhappily through lay-off...I guess we'll simply see just how much it means to the company to have someone expressing some interest to voluntarily leave happily. I do see where you stand. It would be "Take it or leave it, and how dare you to want to discuss". I don't think it will happen like that. I think there will be some appreciation on their part based on the circumstances. Maybe not monetary, though. Unlikely is the popular consensus there.

 

[pattytx]

I think cbg knows why companies offer severance.

What she is asking is, why should the company negotiate with you for anything over and above what they are already offering?

 

[cbg]

And what "possible risks" associated with an "unhappy" layoff do you see?

I think you are the one who does not understand. Having you leave happily versus unhappily is not even remotely close to enough of an incentive to give you an additional 14 weeks of severance, considering that they can quite easily and legally lay someone off involuntarily with no legal risk whatsoever.

 

[ecmst12]

It is illegal for any severence agreement to forfeit one's right to apply for unemployment. You ALWAYS have the right to file no matter what and I *believe* that even in a voluntary buyout, it's still considered a layoff and you will be able to collect if you are still unemployed when your severence runs out.

 

[truthbtold]

ecmst12...thanks for the info!

I believe it depends on the state. I'm fairly certain that a voluntary buyout only makes one unemployment eligible if one was "strongly advised" to take it. Some at my company ARE being strongly advised. I'm also fairly certain that if I took the buyout, and then filed for unemployment, that my company would contest it. They ALWAYS contest unemployment.

But I WILL DEFINITELY talk to the Department of Labor about that. Thanks!

patty...Again, because they WANT buyouts accepted, and it's not happening. They would prefer buyout to layoff. If there was a rush at the door, I obviously would have nothing to negotiate. That's just the way "supply and demand" works. And, still, it doesn't mean I'll get anywhere. It just opens the door...

cbg...Again, the MAIN reason severance is offered is to ELIMINATE any legal risk. Obviously at your company, it wouldn't be worth an extra 14 weeks. And maybe not mine, either. But some professional people on a board other than the ones you're on seem to feel I have a reasonable chance. They've even given me some counseling on how to go about it.

And so, it's done. My document is in. The ball is in the company's court at this time. In any event, the document needed to be presented in order to discuss 3 less prevalent but still important items of their agreement. We will know the outcome real soon...

Thanks, everyone, for sharing!

Special thanks to eerelations and ecmst12...you always bring a lot to the table, and you share your thoughts respectfully!

 

[cbg]

If you're talkiing about the board I think you are, I wouldn't count too highly on their advice. But, if you want to screw up your chances of any severance at all, that's your decision.

 

[truthbtold]

SUCCESS!

My document was received Friday morning, and I received a phone call that a new Agreement would be overnighted to me, which I have in my possession and will sign. So thanks for the advice of putting this in a document. They were EXTREMELY receptive. It even includes the 4 weeks vacation pay that I decided to remove from the discussion! As for the rest of the commentary on this thread, it is now official that the proper advice was...

"It depends on just how eager the company is. It's possible to negotiate a better deal. It's also possible that they may just lay you off or fire you. So, consider both possibilities. If you think they have incentive to negotiate with you, use caution and be very polite and very professional. Good luck!"

Fortunately, I got that advice with counseling elsewhere, as I previously mentioned. For those who may have followed this discussion for pointers, you can email me to be directed to the valuable information. Remember, get some pointers here, then validate the advice no matter how expertly opinionated it comes across.

If you're talkiing about the board I think you are, I wouldn't count too highly on their advice. But, if you want to screw up your chances of any severance at all, that's your decision.

In the end, the ONLY way I would have "screwed up my chances" would have been by taking your corporate-slanted opinions as gospel.

 

[cbg]

Aha, the OG factor at work again!