“If my boss tells me to find a new job, and I find one, do I lose my severance?”

Question: My boss told me that they will have to terminate my employment, and I should look for another job. In my contract it says if they terminate my employment I get two months severance.

My question is this: if I find another job, and tell them that I have, will they still have to pay me my severance?                

New York, NY

Answer: Dear RK: Really good question, but a bit more complicated than it seems. Here’s my thoughts:           

1. Since you wrote that you have a contract, the first place to look for what you are entitled to is in that contract. A contract is a set of mutually enforceable promises. If your contract says that you have a right to two months of severance, it probably also says something about in what circumstances you are entitled to it. For example, I am sure it does not say “You are entitled to two months severance if you are fired for misconduct.” I am also sure it does not say, “You are entitled to two months severance if you resign voluntarily.” You need to read the words of the contract carefully for what it says about when and under what circumstances you are entitled to your severance.

2. Chances are your contract says, in effect, “If you are terminated without your having committed ‘cause,’ you will get paid two months of severance.” That is the most common statement regarding severance that we find in employment agreements. It also implies that you are not entitled to any severance in other circumstances: (a) being fired for misconduct, (b) voluntarily resigning, (c) dying, or (d) becoming disabled.  

3. If you get a new job, you will have a choice: (a) resign to take that job, or (b) stay and collect severance. Imagine, for the moment, that you are successful tomorrow in getting a new job, and that your future employer would like you to start in two weeks. In that event, you will face a choice of either (a) resigning from your present job, or (b) staying where you are until you are laid off, and then collecting two months’ pay. Unless you (i) are quite wealthy, (ii) plan on retiring now,  or (iii) would rather collect unemployment insurance, you will need to resign from your present job – and chances are you will not, therefore, meet the requirements of getting paid severance.

4. Being told you are going to be terminated is not the same as being terminated; also, resigning under these circumstances is not considered “involuntary,” but purely “voluntary.” These two thoughts are the most common thoughts that my clients have responded with when confronted by what you are confronted with. “Isn’t what happened to me the same as being terminated?” The answer in law, and as a matter of fact, is “No.” Also, “Isn’t my getting  a new job something I had to do after being told I should do that, and I was going to be terminated?” The answer in law, and as a matter of fact, is “No.” Unfortunately, if you are successful, you will probably lose your severance.

In everything you do in life, you should keep in mind that the best results are achieved when you aim toward the “positive outcomes” in life, and do not worry about what benefits you may, as a result, “lose out” on. Severance is intended to help employees during a period of transition; not to be a wonderful windfall. If you don’t have any loss of income in your transition, then it makes sense that you would not get help in that instance.

5. However, if you do get a new job, and it pays less than your present job, I think you should respectfully request the severance – or part of the severance – anyway. In this instance, I do think you are entirely reasonable and justified in asking that, despite what your contract may provide, you be paid the severance, or part of it, as you will – slowly but surely – actually suffer some adverse economic consequence as a result of the transition. In my experience, perhaps one-third of employers would pay you the severance if you made such a request. So long as you make your request in a respectful fashion, you have nothing to lose, and everything to gain.

R.K., I hope this is helpful. Good luck in your job search.                                          

Al Sklover

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