Severance offered in exchange for resignation. Is this okay?
mhf
1 Post
Is it okay to offer a severance package to an individual in exchange for their immediate resignation? An employee is not meeting sales goals that were established before and upon execution of her offer letter. She is being offered a 30 and 60 day plan to meet goals, OR can resign effective immediately with a 30 day severance package. I just want to make sure there are no legal implications to the severance offer. The employer HQ is in PA but this branch is in TN. FYI - this is not related to retirement or early retirement. Also, no discrimination as her and a white male are both being issued this plan. Thanks, Amber
Comments
I wouldn't do it without getting appropriate release against past and future claims and providing the normal review and revocation period.
Susan
Thanks Susan. I was thinking that as well. I will definitely provide that paperwork.
I agree with Susan....the employer should definitely get something from the severance payment.
That said, you need to think through the consequences if the employee refuses the severance and wants to stay to try to improve performance. In this economy, I think that there is a much larger chance than normal. Honestly, I would not let this be the employee's choice. It sounds almost as if you are trying to be too nice. If they are worth terminating immediately, then do so. If they are worth working through a performance plan, then do so. I think if they do stay, you will see a morale problem pretty quickly....or some other type of claim -- like a workers' compensation claim, etc. Because at that point, they both know their days are numbered.
[quote user="mhf"]Is it okay to offer a severance package to an individual in exchange for their immediate resignation? An employee is not meeting sales goals that were established before and upon execution of her offer letter. She is being offered a 30 and 60 day plan to meet goals, OR can resign effective immediately with a 30 day severance package. I just want to make sure there are no legal implications to the severance offer. The employer HQ is in PA but this branch is in TN. FYI - this is not related to retirement or early retirement. Also, no discrimination as her and a white male are both being issued this plan. Thanks, Amber[/quote]
You should always offer voluntary severance in combination with release agreements. There are ADEA considerations. Such agreements must be made with a provision of time to consider and a rescision period after signing for people over 40. I've heard one attorney who is normally very conservative say some pretty aggressive things about how to handle such situations and force the person to make a decision quickly but I'm not comfortable with his line of reasoning.