Voluntary Severance Offers - How to Negotiate and What to Look for When a Company Offers Severance

Philadelphia Area Severance Lawyers Representing Only Employees

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NOTE:  This Article was initially posted in one piece. Realizing it was far too long, we broke it into 2 pieces.

This part discusses what we refer to as "Voluntary" severance offers.  Click Here to jump to the second part, which discusses what we refer to as "Mandatory" severance offers.

Understanding and Negotiating Severance - Key Things to Bear in Mind Concerning Your Rights When Offered Severance

In general, there are two types of severance packages: Those that are required under the law, a contract or a company policy, and those that are made voluntarily for any one of a number of reasons.

Is Your Severance a Product of Good Will or Legal Obligation?

When considering a severance package that has been offered to you, the first thing you need to do is
determine whether the offer was voluntary or mandatory.  Once you have that figured out, there are multitude of considerations that must be weighed in the course of deciding whether to accept, reject and/or attempt to negotiate the severance package offered to you.

This Post, while certainly not exhaustive, addresses the most common scenarios, approaches and considerations that I have learned about mandatory severance since I started practicing law in 1991.

Do You Have a Question About Severance and Pennsylvania Unemployment Work Together? Click Here.

Why it is Important to Understand the Employment "At-Will" Principle When Considering a Severance Offer

Most Americans are employed "at-will."  That means they have no right to any sort of "due process" in connection with any decision made by the company to terminate their employment.  If you are "at will," your severance offer is most likely voluntary.

VOLUNTARY SEVERANCE OFFERS - THE "AT-WILL" EMPLOYEE

I am an At-Will Employee Being Offered Severance Provided I Agree to Release the Company From Any Claims I May Have Against it for Discrimination, Unpaid Compensation, etc.

Voluntary severance offers made to at-will employees are very, very
 common.

Why, you ask?

Companies Want Finality -
Which a Release Secures

When a company wants to part ways with an employee, it usually wants to make sure that the relationship is severed once and for all.  The best way to achieve that objective is to have the employee sign a Release.  The best way to entice an employee to sign a Release is to offer severance.

Many employees are, understandably, suspicious when such a severance offer is made.  "Why," they ask, "would the company want me to sign a Release, unless it has done something illegal?"

Is it sometimes the case that employers offer at-will employees severance in order to get a Release because the employer believes it is at significant risk for being suing for wrongful discharge, or breach of obligation to pay compensation, overtime, etc.??  Yes,  it is.

Is that usually the case?  No,  it is likely NOT often the case!

Many companies make it their standard practice to offer severance to employees who have been with the company for more than a few years.  There are at least two good reasons for this that spring immediately to mind.

One, such severance offers often reflect the employer's desire to extend good will towards its employees, even those who the company feels are no longer suitable for continued employment.

Two, employers want to know that a former employee will not come back to haunt them in the future.

In this regard, severance offers attached to a Release simply reflect common human experience.  "Hell hath no fury like a woman scorned."

And, maybe, like a fired employee.

So, even though the company does not believe it did anything wrong by firing the employee, it understands that the former employee may not share its view, or may be driven by anger to find a lawyer to sue the company for a variety of reasons.  Hence, offering severance in exchange for the peace of mind engendered by an executed Release simply makes good business sense.

Should I Sue or Sign a Release in Order to Receive Severance?

Where severance negotiations are concerned, this is an area where a qualified attorney can make all of the difference.

That is so because while, in general, the offer of severance and Release signifies nothing nefarious, that is not always the case. Sometimes, rather nefarious doings are, indeed, afoot.

We have seen many situations where an employee's termination appeared to be unlawful.  Indeed, our entire practice is centered upon employee rights, and it is a complex field indeed.  So, while there are many, many people who call lawyers because they are upset after having been fired, there exists only a small percentage of lawyers who actually represent employees on a full-time basis.  It is a very taxing area of practice because employee-side lawyers are often fighting large companies with unlimited resources and a cadre of high quality lawyers.

The problem, though, is that many lawyers who receive calls from disgruntled individuals who have recently been fired give "free advice" over the phone that leads the client astray.  This leads to workers accepting severance offers when they should not have done so, and to workers rejecting severance offers that they should have accepted.

Knowing What is Illegal Discrimination is
Often Key to Deciding
Whether to Accept Offered Severance

The fact of the matter is, illegal terminations exist in a relatively small percentage of situations involving employee terminations.  But, where they do exist, an employee may be entitled to substantial compensation.  So, when we are asked whether a severance offer should be accepted or rejected, it is our duty to fully assess the facts, and to then explain how the law works under the facts presented.

Having been duly informed, it is then up to the client to decide whether to accept the offer as is, or to attempt renegotiation.  If renegotiation is appropriate, it is then up to us to do the best job we can via creation of legal leverage that, it is hoped, will cause the employer to consider our client's legal rights and position, with the result being a more generous severance offer.

Litmus Test for Employment Lawyers:  Would I Sue on Contingent Fee Basis if Severance Negotiations Fail to Achieve my Client's Goals?

Ultimately, it is the client's decision whether to accept or reject the company's final settlement offer.

In close cases, we utilize one very useful tool to assist the client in evaluating his/her position.

Contingent Fee Agreements
High Risk Undertakings

That tool is our willingness to file suit on a contingent fee basis for whatever claim is being contemplated if severance negotiations fail to achieve a desired result.

We are a fairly aggressive lawyers who knows employment laws.  We like contingent fee cases when they work out well because we can make a fair amount of money.

However, when they do not work out well, contingent fee cases can be real back breakers.  Financial, emotional and psychological back breakers.

Of course, the converse proposition is true as well.  If we are interested in pursuing the case on a contingent fee basis, the client has more and better options.

"Will you, sir, take this case on a contingent fee basis?"

The contingent fee question is so critical that, on balance, if you have an attorney assisting you in the
negotiation of severance, the most critical inquiry, at the end of the day, is this one: "If I reject this final offer, will you file suit for me on a contingent fee basis?"

If you have a qualified attorney, his/her answer to that question may be as important as any other consideration you weigh in the course of reaching your final determination.

Philadelphia Area Employment Attorney Helping Employees With Severance Negotiations

We typically represents employees who need an employment lawyer in Philadelphia County, Chester County, Delaware County, Bucks County, Berks County, Lancaster County and Montgomery County.

Pennsylvania Employment Attorney Provides Free Telephone Consultations About Severance

If you are looking for an employment lawyer, and live in Malvern, Wayne, King of Prussia, Downingtown, Glenside, Doylestown, Radnor, Newtown Square, Exton, Philadelphia, West Chester, Skippack, Langhorne, Haverford, Nether Providence, Broomall, Drexel Hill, Reading or any of their surrounding towns, feel free to send us an e-mail via our Contact Form or give us a call at 610-647-5027.  We are always glad to spend some time with people via a free telephone consultation.

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