Layoff--when and severance agreement

Paige

We are going to be laying off 2 employees. My first question is, would you recommend telling them in advance or telling them their last day of work? The latter sounds so harsh. The second question is--if we decide to tell them in advance, offer them severance and have them sign an agreement, if they "act up" during the week (performance slacks, they bad-mouth company, etc.) can we release them immediately without severance? I plan to handle this as "compassionately" as possible, will offer to help in any way, etc., etc., but just in case any animosity still exists, I would want to nip it in the bud.

So basically, can I say, your last day is 12/14, you will receive a severance by signing this agreement, if we encounter any problems, you lose the severance?

Gillian

Your basic question is a legal one - can you abrogate a contract under certain conditions? My non-attorney opinion is that if you want to retain the right to cancel a contract you would have to write the conditions as part of it. Beyond that your question has other implications - how to control problems that arise after the news is given to the employees. I think it boils down to - do you have responsible employees is this group or not. If people can act responsibly even under adverse conditions then notice ahead of time shouldn't be a problem. If they can't, then last day notification is more appropriate. I know that finacial conditions sometimes do not allow this, but laying people off before the holidays is a bummer, not only to the employees but to their friends who will remain. To them, the action of laying people off before the holidays will seem harsh and it will probably impact their view of your company.

Down_the_Middle

Having done this more times than I'm proud to admit during my career, I have some biases concerning RIF's. One of them is to give people a reasonable amount of advance notice. Remembering that this whole process is in a fish-bowl, employees will watch how you handle this, cuz there will be fear that they are next. How you treat the departing employees will be a reflection on how they might be treated, so try to handle this with dignity, compassion and respect. Don't forget about the survivors of the RIF!!! They'll need as much reassurance as those who are asked to leave. How much advance notice is always difficult, but remembering that WARN specifies 60 calendar days, I try to use that as a guideline even though WARN may not apply. I have adopted a 30 day min notice on a few occasions, but only when the facts suggest that 60 days is too long and cumbersome for the employer.

Your concern about employees "acting up" can be addressed this way:
1. explain that if problems occur during their transition period that you'll term them immediately and they will leave the org "not in good standing"---which may impact future references, unemployment comp eligibility, etc..... Treating this as a termination should get their attention.

2. You can also threaten to withhold severance entirely if they act-up as long as this severance is not part of a settlement agreement where the employee waives the legal right to sue in the future.

My guess is that your definition of severance is simply a safety net of income to help them transition to other employment, so I'd recommend going with option 1 above.

Paige

We do have an agreement that they sign to waive legal rights. However, there is a clause in the agreement that states, "The employee further agrees not to disparage the business of (the company) or any of its subsidiaries, employees, officers, directors, trustees, volunteers, instructors, consultants, members, customers, or students to any third party, verbally or in writing, now or in the future."

Wouldn't that cover us if we nullified the agreement for inappropriate behavior?

Theresa Gegen TX

I don't think that it would cover you (it would be a question for a jury, whether their conduct violated the agreement -- and would you really want to go all the way to a lawsuit over this).

Generally, I think a clean break is the best. Especially if you are giving severance. Employees can get very angry when they are laid off or fired and use the last two weeks to sabotage the company, put fear in other employees, or to drum up evidence for a lawsuit against the company (gather documents, record conversations etc). If you are giving them a severance, so that they will have some income coming in for a period of time, I don't think that it is necessarily less cruel to let them continue to work for a week or two.

I would call them in and lay them off, offer them the severance for the release and give them a few days to think about whether to sign the severance agreement. They need to focus on the future -- not on the past. And being in the workplace can only cause trouble for the employer. I can't see them getting much done when they are worried about their future.

If either of the employees are over age 40, and you want to get a release of age claims, you need to comply strickly with the ADEA (which mandates a specific waiting time for consideration and specific language).

Good Luck!

Good Luck!

bsa

Giving the employee a few days to respond to the severence agreement is a smart practice. You don't want the person to claim that the agreement was signed under duress, that would defeat the purpose.

Paige

Ok--I have to jump in here because I'm getting varied responses from this board as well as from other HR colleagues. The 2 people we are dealing with are not problem employees in any way. One is a maintenance worker and the other is a clerical employee who just started with us in August. We have been ordered to cut our payroll budget for next year and in order to do that we are eliminating 2 positions we feel we can "afford" to eliminate (and transfer duties elsewhere).

I am of the opinion that you should give a fair amount of notice—actually 30 days would have been nice, but we are needing to take care of this before the next calendar year starts. So now, for at least one of the positions, we are going to tell the person on Monday that Friday is their last day. We have not come to a decision on the other.

I understand people’s points of why keep them around to stew and brew, why keep them if they are “no longer needed,” etc. But considering it is holiday time, for one thing, and the fact that we are dealing with fairly mature adults—why can’t we give them so sort of notice?

As I mentioned previously, I certainly intend to handle this with as much respect as possible--meeting with the employees, giving them adequate separation information, offering reference assistance, etc.

Has ANYBODY (other than Donna) given some sort of notice to the employee(s) they are laying off? Anything from 1 week to one month?

tfevergrn

We had to lay off an IT manager. Knowing his character, I made a judgement call to give him advance notice of his lay off. There were no problems after the notice and as a matter of fact, on his last day, he expressed his gratitude in how his termination was handled. We had also offered time off, if needed, to accomodate his efforts in landing future employment. Although his last day was sad, he left with his dignity and there was no animosity. His advance notice was three weeks.

Down_the_Middle

Since it appears the "wind" is blowing toward less notice, I would make every effort to inform the employee on a Tues or Wed., NOT on Friday. The remaining staff need some time to process the departure of their colleague and a Friday notification gives the rumor mill 2 full days to get strengthened. You want your "survivors" to have a couple of days to ask questions and handle the lay-off b/4 they are off for the week-end.

Gar

Just as an aside, I've always felt that severance agreements that permit employees to give up certain rights in exchange for money are a violation of the equal protection clause and, therefore, unconstitutional. I simply fail to see how a person can lose rights guaranteed him/her by law without due process? For instance, the 13th amendment outlawed slavery. If I signed a piece of paper agreeing to it, can I sell myself or my children into slavery? I've voiced this view many times and I've heard the numerous arguments. I don't believe this issue has ever been brought before the supremes. But I could be mistaken and, if so, I'd be interested to know from anyone how the high court ruled.

Theresa Gegen TX

Give it up Gar. YOu are never going to get the court's to buy off on your equal protection argument. They LOVE settlments. They feel like their dockets are overwhelmed, and would much rather have the parties work it out.

Of course, the employee can always forgo the severance, then sue. But they might lose!! That is their choice!!

Paige

OK--the dirty deed has been done. And here's what I learned. In essence we met with each employee today and told them their last day would be this Friday. After talking with one individual, who actually was more upset about the friends she was leaving behind than the loss of the job, she made me realize that it would be better to NOT have her work through the week just because she's going to be more preoccupied with searching for a new job. She asked about making calls for interviews, etc. So in her case it's a matter of productivity rather than bad-mouthing the company or deleting company files.

With the other--he was very emotional--in a sad way, not a violent way. We told him that if he didn't want to work the rest of the week that would be fine, we would still pay him. At first he said he didn't think he'd be able to (because of how upsetting this was). Later in the meeting he offered that if we did find ourselves needing the help this week, he wouldn't mind coming in.

So the moral of the story--first and foremost, treat people with respect and always use "the golden rule." I think both would have been MORE upset if we said your position is being eliminated AND we want you out today. This way we put it in their lap and made them feel like they had a little more control of the situation. Second, obviously it is going to depend on the company, the situation, the number of employees being laid off, and who those employees are. Those dynamics were not necessarily mentioned by everyone--responses were basically give them no notice regardless of the situation.

I appreciate the responses I received. There's a first time for everything and, fortunately, I've gotten away without having to go through this type of situation for quite awhile now. But it is always nice to have the additional "experience" under your belt.

Theresa Gegen TX

Good Job!!