Severance Programs and Entitlement to Severance

Severance and Loyalty Programs And Employment Law

The interplay between severance agreements and employment law violations can be complex. At Costello & Mains, LLC, our skilled New Jersey employment law attorneys help employees whose rights have been violated. In some cases, this involves established severance programs or the offer of severance pay as a cover to disguise a settlement for conduct that violates state or federal employment law. If you have questions about a severance program and potential employment law violations by your employer, we can help.

Some companies have "loyalty" initiatives that are designed for long-term favored (and usually highly placed and highly compensated) employees. Pharmaceuticals are noteworthy for this. Sometimes, these "loyalty" programs will involve an internal "severance program" that guarantees a certain amount of money to a departing employee. Sometimes, these programs guarantee that money regardless of the reasons why the employee is leaving. For example, some loyalty programs might say that severance is automatic despite the fact that the employee might have been fired for cause or for misconduct. Some loyalty programs differentiate between "for cause" termination (for example, for wrongdoing or misconduct) from other types of termination or self-termination (as in the worker is going on to a different job or was let go for economic or non-fault bases reason).

To the extent that a company has such an internal "loyalty" program addressing severance, we can address any issues related to potential employment law violations and the way the severance program affects the situation. We want to know why the employment is ending. If the employment is ending for reasons which might give rise, independently, to claims under New Jersey employment laws, we might combine the representation both in terms of seeking substantial justice for the client under their harassment, retaliation or discrimination claims on the one hand, and also obtaining the severance provided for by contract in the "loyalty" program (if one exists).

Such programs, in order to be enforceable as potential contract claims, must be reduced to writing and they must be in the form a contract between the employer and the employee, whereby the employee relies upon the promise of severance when employment ends in deciding to remain with the company as opposed to taking other jobs. This reliance on the part of the employee is what generates the "fairness" of asking a Court to order that the company pay severance when it has refused to do so, on the theory that it's a breach of contract.

As we noted above, other types of "entitlement to severance" might arise from certain public employment positions under New Jersey Public Employment Law either of an administrative nature through the civil service office or through an administrative nature arising from obligations in the collective bargaining agreement for certain unions.

Such claims arising under civil service or under union contracts, however, are not properly the subject of lawsuits (of the type that this firm files) in Superior Court. We would direct such clients to counsel that would handle such administrative claims or to agencies where such claims could be properly placed.

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