Severance Pay

I currently work for a laboratory that is owned by the parent Engineering firm. The Engineering firm will be selling us very soon to another laboratory (we are being bought out). Part of the sale agreement is that job offers be made to the majority of the lab personnel (this is being done). The parent company is now maintaining that because they made a deal where we do not lose our jobs they do not intend to provide us with severance pay. My opinion is that severance pay is owed because I am being terminated from my old job and will no longer be an employee of the original lab. I have copied the severance pay policy as it is written in our employee manual. Can you please comment as to whether I have a case or not in getting severance pay?


3.6.6 Separation Pay
Occasionally, the Firm may need to adjust the size of its work force to meet current and anticipated workloads. These adjustments may require separation of one or more employees. The terms of separation of any employee will be approved by the President in advance of notice to each employee.
Any regular, full time non-contract employee whose separation is due to layoff for lack of work; position elimination; or failure to meet performance expectations; become subject to the following provisions:
1. An employee who has completed less than one year of continuous regular full-time service may not be eligible for separation pay.
2. An employee who has completed at least one year, but fewer than five years of continuous, regular, full time service to the Firm may be provided separation pay equal to two weeksí pay at his/her regular rate.
3. An employee who has completed at least five, but fewer than ten years of continuous, regular, full time service to the Firm may be provided separation pay equal to three weeksí pay at his/her regular rate.
4. An employee who has completed ten or more years of continuous, regular, full time service to the Firm may be provided separation pay equal to four weeks pay, at his/her regular rate.
For such separations from the Firm, the Firm reserves the right to provide a notice period between immediate and two weeks.
All benefits will cease on the separation date.
Contract Employees whose separation is due to layoff for lack of work; position elimination; or failure to meet performance expectations, will be subject to separation pay provisions contained in employment agreements.


Thank you for your help in this matter.

1 answer  |  asked May 17, 2005 4:09 PM [EST]  |  applies to New York

Answers (1)

David M. Lira
Entitledment to Severance Pay

In New York, employees have no right to severance pay.

Some employers, however, provide severance pay as a benefit in a way similar to the way some employers provide helath benefits or pension benefits. These employers will set up an elaborate "plan" which covers the issue of severance pay exclusively. These employers might be held liable for unpaid severance pay under the Employee Retirement Income Security Act (ERISA).

Some employers provide for severance pay in employee manuals. In some cases, these types of severance policies might be considered to be ERISA severance plans, under which an employer might be held to be liable for unpaid severance.

Here is a potential chink in the armor: ERISA plans can be changed at any time, provided that employees do not lose benefits they have already accrued. Thus, an employer can change a health benefit plan to cut off health benefits althogether, but it is more difficult, but not impossible, for an employer to reduce or cut off pension benefits. Where a severance plan falls depends on exactly what the severance plan says.

If you want an informed attorney opinion as to whether the severance issue with your employer grants you any enforceable rights against your employer, you need to contact an attorney and schedule a formal consultation. This forum cannot provide legal opinions about any person's particular situation.

posted by David M. Lira  |  May 17, 2005 5:28 PM [EST]

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