Am I Entitled to Severance?
The information in this article generally describes the law and is not intended to be specific legal advice. As I'm sure you know, laws frequently change and can vary in different jurisdictions. So please consult with a lawyer if you have specific questions about your situation.
If you were hoping for a simple answer to the question, “Am I entitled to severance pay?” you will leave with the short, two-word answer, “it depends!” But you didn’t come to this blog post for those two infuriating words, did you?
Let’s dive into the weeds.
Are you entitled to severance? It depends.
In Utah and most other states, there is no right to severance generally in the law. Utah is what is called an “at-will” state. “At-will” presumption is something that's often misunderstood by people, but it simply means that people can be hired or fired for any or no reason at all. Even a bad reason. And you have no recourse in the law against that.
Now, there are some exceptions to that rule, (subscribe below to be notified when we post about the exceptions) but generally, that means that because you are not entitled to continue to work for an employer, the employer doesn't have a responsibility to provide you with any severance when they let you go. And so, as a matter of normal, ordinary statutory, and common law or case-made law, you don't have a right to severance.
So, when are you entitled to severance?
Keep scrolling or watch D. Scott Crook’s podcast Fired Up for more information.
There are essentially three times that you might be entitled to severance.
If you are an executive-level employee with a written employment contract.
If you are a member of a union with a union contract that includes a severance provision.
If you work for a governmental entity, it may be required to pay severance.
Executive-level employees and severance
Many of my executive clients often work under a written employment agreement. Most employees in Utah do not work under a written employment agreement. Most employees work under an oral promise to pay. But executives and professionals often have employment contracts with a severance provision that has been negotiated at the time the contract is signed (And if they are my clients, I always push to include this provision.) Therefore, the first order of business is to examine, if it exists, the employment contract to determine if a severance provision is included.
Unions and severance
If there is a union contract, there is likely to be severance provisions within a union contract. If you are part of a unionized work site, you may have the right to receive severance.
Now, interestingly, the first and second scenarios I describe derive from the same thing. And that is a contract. If you have a contract that says you have the right to severance, then you are entitled to severance.
Governmental entities and severance
Lastly, if you work for some governmental entities in Utah (this is true in other places as well) they will have severance provisions built into their human resource or personnel policies. They also happen to be the most unionized places, although in Utah, that's not true, but throughout the country, there are more unions with local government entities than anywhere else. And they often will have severance provisions included in their union contracts.
Even if an employer is not entitled to pay severance, in what circumstances is it customary for them to give severance?
As noted, the law doesn’t require it, but there is a custom to give severance in two or three situations. The first and most obvious one is if there's a mass layoff. Often part of those layoffs will include a severance package. The employer will provide that severance to an employee and ask them to sign. (In future articles, we will discuss what you should look at in severance agreements before you sign).
The second time that you might expect to get a severance agreement, even if there's no contractual or statutory right to one, is if you are a high-level executive working for an employer and you are being laid off. This is because a lot of times people want to avoid any publicity and controversy. They also do not want you to take employees with you. And so often you will be offered a severance agreement when you leave if you are an executive.
Should you ask for severance if it is not immediately offered to you?
It never hurts to ask. Even though there is a mythos that corporations are bad, and the man is out to get you, most people feel bad when they lay somebody off unless the person being let go is a real problem. Even in those circumstances, it may be in the interest of the employer to offer a small severance in exchange for a waiver of the employee's right to quit.
If there's any opportunity for you to ask, I would do it just to see if it's possible. It’s like two weeks’ notice. You are not required to give two weeks’ notice, but employers often ask their employees for it anyway. It’s tradition. So, you are not harmed by asking for severance if you do it the right way.
Interested in learning more about severance negotiation? Listen to Fired Up!
The information in this article generally describes the law and is not intended to be specific legal advice. As I'm sure you know, laws frequently change and can vary in different jurisdictions. So please consult with a lawyer if you have specific questions about your situation.