Can a company give me a document letting me know I will get severance and then later tell me I wont?


The company I worked for filed Chapter 11 in April 2001. They let go of almost half of the employees with a severance package. Each month or two after that, they continued to lay people off and provided severance packages. I was laid off in November of 2001 and was told I would be eligble for severance pay if I had been with the company for more than 6 months (I've been with the company for 4 years) AND if I sign and return the Separation and General Release Agreement which was going to be mailed to my house. It is now the end of November and I still have not received this agreement. I did however, recieve my first severance check. Now, they are telling me the company will be laying off more people and no one will recieve severance - including those who had already been let go.

1 answer  |  asked Nov 26, 2001 2:17 PM [EST]  |  applies to New York

Answers (1)

David M. Lira
Entitlement to Severance from an Employer in Chapter 11

Your query is much more complicated than you know.

Generally, an employer has no obligation to provide employees with severance pay, and an employer can generally give certain employees severance without giving other employees severance.

However, your query indicates that a good number of employees have gotten severance, and severance was being determined by some pre-determined policy. This suggests to me that the employer decided to provide severance under a "plan" covered by the Employee Retirement Income Security Act ("ERISA"). If there was a plan, then the employer might have an obligation to pay you severance under that plan.

Conceivably, the employer might have neglected to follow the niceties of ERISA, but under circumstances creating a "de facto" plan. Whether that is the case in your situation will depend on the details of your case. Your query certainly does not provide nearly enough information.

If there is a plan, you need to obtain a copy of the "summary plan description" or "SPD." Maybe, but I don't know, that document you made reference to in your query is the SPD. The SPD is very important, in that it describes your rights.

Another complicating feature of your query is the fact that your employer filed Chapter 11. Again, any resolution of what you might be entitled to receive, and how, would depend to a large extent on what the SPD says.

posted by David M. Lira  |  Nov 27, 2001 11:25 AM [EST]

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