Q: I was laid off in August 2001 but found another job within three weeks. The severance package from my former employer stipulated that I would get paid every two weeks for a 13-week period. [It also stipulated that] if I accepted another job within that [13-week] period that paid more than my biweekly severance pay, I would forfeit my package. I didn’t sign the severance acceptance letter. The offer was valid until Sept. 21. Is this legal and do I have any recourse? If I don’t, at least I’ll have a better understanding of severance packages and employee rights.
– A.T. Bell, Chicago
A: Severance packages have come under heavy scrutiny lately, particularly since many company policies on this matter are out-of-date. As a result of the recent overwhelming layoffs, many companies are offering separate packages based on time served and level of employment.
The other consideration is that severance is usually offered at the discretion of the employer. An employee may be eligible for severance but not necessarily entitled. If a company does have a policy, it would outline eligibility based on time served and salary.
You’re fortunate to have landed another job quickly, but signing the contract would have put a little extra cash in your hand for at least a couple of weeks. It seems unusual that a company would have tied your severance compensation to future employment since severance is usually based on the time spent with the company you’re exiting. But as an employee, you have the right to negotiate all terms. Unfortunately, you have no legal recourse.