Isn’t “mitigation” of severance unfair?

Question: My severance is mitigated, meaning that if I get a job during the period of time I am getting paid severance, I have to report any money I earn at my new job to my old employer, and they reduce how much severance I get by that amount. Isn’t this unfair? It seems to me like I am then “working for free.”

Palm Harbor, FL

Dear Randi,

Like so much in life, “It’s all in how you see it.” When it comes to “mitigated severance,” some people see the first word (mitigated) and resent it, while other people see the second word (severance) and appreciate it.

The idea behind mitigating severance is that severance is not intended by many companies to grant an extended vacation, or “bonus,” but rather to give out of work employees transition support. In that view, the employee who gets, for example, 15 weeks of severance and a new job after only 5 weeks, is getting a 10 week “bonus” or windfall. In mitigated severance, the severed employee would have to give back the 10 weeks of “overpayment.”

Mitigation of severance is not common. These days I see mitigation in maybe five percent of severance agreements, probably less. It’s becoming increasingly unpopular for two reasons. First, in order for mitigation to work, the severed employee has to report his or her new employment to the old employer, and how much he or she is earning. This, itself, breeds disputes and lawsuits, the very thing that severance is supposed to prevent. Second, it encourages people not to look for work, but to avoid seeking new employment for fear of being hired, which is just plain wasteful. Most HR professionals do not like this process, and we are seeing less and less of it as time goes on.

Is mitigation of severance “fair.” It’s all in how you see the word “fair.”

Best, Al Sklover

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