Severance Pay

Carolsmith · March 2006

[font size="1" color="#FF0000"]LAST EDITED ON 03-10-06 AT 12:54PM (CST)[/font][br][br]Plans are to terminate the Controller of our company for cause. Our consultant is advising us to offer her the opportunity to resign and offer her some form of severance to sign off regarding any form of legal action, etc.

I would like to hear from participants in the Forum as to their policy on Severance Pay.

mwild31 · March 2006

Hi Carolsmith - could you give us some more information regarding the controller? I have to say that I'm not a knee-jerk Severance Package believer. What situation does your company find itself in?

seeleyhr · March 2006

policy here is one week of severance for each week worked. However, we have a legal document that stops legal action on both sides and confidentiality for reason for termination.

mbeam · March 2006

We have seldom used this for anything outside of job elimination. Would also be interested in more details. Depending upon the cause for the separation we would look at this as a considerations (i.e. job outgrew the person and no other positions available)

Carolsmith · March 2006

We have a consultant working with our company to turn help grow the company. The Controller in her 10 years with the company has never ajusted to a corporate setting. She had been a computer/accounting consultant prior to joining our company. The COO never addressed her bad attitude towards all other members of management. (Note: the COO has been terminated at the suggestion of the consultant) She is sarcastic towards people. Often has outburst of anger when someone disagrees with her way of thinking. Most people try to avoid her because she is not pleasant to do business with. I find myself avoiding her often because you never now what type of mood she is in. All other management employees are happy and excited about the work the consultant is doing for our company. WE have lacked leadership for a long time from the COO and like we say: We are turning the boat around and those that don't want to pick up the oars and paddle need to get off the boat. Sorry - that the story is so long and I am almost embarassed that it is taking a consultant to bring our company back to what it used to be. Thank you for replying.

Carolsmith · March 2006

Do you mean one week for each week worked, or one week for each year worked?

hrdir03nafcu · March 2006

Carolsmith:

We have intentionally avoided writing anything into our Policy Manual re: severance-- since to do so basically makes it an entitlement for all terminated EEs who meet the specified circumstances.

We have offered severance to EEs who were to be terminated, whether for unsatisfactory performance or for cause, ONLY as an inducement to submit their resignation and sign a release agreement (of course with all the required periods to consider the agreement, recommendation to consult and atty, revocation window, etc.) to cover our butt against potential lawsuits. But we have never, in the 6 yrs that I've been here, provided severance pay to a terminated EE without their signing a release.

Basically, your strategy sounds like a good one: offer her severance if she (1) submits her resignation effective by your required date, and (2) signs a release agreement (consult your legal counsel in drafting the release). Faced with the choice of having their income cut off immediately, and suing you (at best a crapshoot, provided you have solid grounds for her termination, and handle the situation appropriately)--vs. having a period of severance pay to continue their income while they're between jobs-- most EEs in my experience will grab the cash up-front and sign the release.

Severance Pay

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