Severance

I work for a large company and I've recently been provided with the option of taking a lesser paid position or severance. On 1/12/09 they made the offer via email, not a formal agreement. I followed up the offer with a verbal conversation asking for the written agreement. I was told it would not be prepared until my last day, which would be determined to be 2/2/09. I asked if the agreement was similar to those I had seen in the past and the answer was yes. On 1/16/09 I emailed that I would accept the severance and I reiterated the terms. On 1/23/09 I was told the conditions under which I would receive the severance pay had been changed and the change was effective 1/1/09, prior to when they made the offer. However, at the time of the offer I was never told there were revisions being considered or already made. I definitely did not receive anything in writing to this effect. Therefore, I made a decision based on monetary information that was not accurate and the company knew it. I know a company does not have to pay severance. However, if they have consistently paid it at all levels and under a policy I thought was in place, is what they did allowed? I would like to add that I am a woman who recently had twins (3 months ago). There were two of us in similar positions. The other is a male who has been in a senior management position for less time than me, I've never received any write ups for disciplinary reasons and my reviews have always been strong. To date I have not been told why I was not offered an opportunity to remain in the position while my co-worker was retained in the position.

1 answer  |  asked Jan 23, 2009 8:09 PM [EST]  |  applies to Arizona

Answers (1)

Francis Fanning
More information needed re: severance offer

I am assuming from your question that the severance offer that was made in writing was less beneficial than the offer the company made verbally. The fact that it is effective 1/1/09 rather than 2/2/09 doesn't tell me anything without additional information, such as whether you lose other pay or benefits you would have received for the month of January. Generally speaking, severance pay is at the discretion of the employer, and the fact that the company had a history of paying a more generous severance benefit means nothing. There are two exceptions. First, some severance plans are written as ERISA benefit plans, in which case the payment to any individual must be in accordance with the terms of the plan. The second involves the possibility of some form of unlawful discrimination. For example, if the last several layoffs involved men and this one only involves laying off women, changing the benefit may constitute sex discrimination if gender was considered in the decision to pay less.
There is a kind of claim known as promissory estoppel, in which a party is liable for damages when another party acts to her detriment in reliance on a promise that does not amount to a contract. Damages in such a case are limited to what you lost in reliance on the promise that was not kept. You must show that you gave up the chance to take the lesser paying job in reliance on the promise of a greater severance benefit. If the company would allow you to reconsider that decision, you haven't lost anything. The promise of the original severance package is probably not enforceable as a contract, although an argument can be made that all the essential elements of a contract were contained in the negotiations you had with the company. In order to pursue this claim you would have to reject the written severance offer, because I assume it contains a provision releasing the company from any claims as a condition of payment of the severance.
The question about your having had twins and not being chosen over a male counterpart is a completely separate issue. There may be gender discrimination involved in that decision. Again, if you accept the severance, you will probably have to release the company from any claim of discrimination.

posted by Francis Fanning  |  Jan 26, 2009 2:52 PM [EST]

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