Breaking Up Is Hard To Do…

“My company laid me off, am I guaranteed a severance pakage?” Matthew Duncan with Anderson Jones, PLLC discusses this hot topic in employment law!

A severance package, unless provided for under a previously existing employment contract, is not mandatory in North Carolina. An employer is not obliged to agree to a severance package, nor is an employee entitled to expect one absent pre-arranged agreement. However, severance packages do serve a purpose. They often are a negotiated contract in which the employer will make a lump sum or monthly payments, and in turn, the employee will agree to relinquish some rights he or she may have. This may include the relinquishment of possible legal claims against the company, but also includes incorporating provisions such as non-compete or non-solicitation agreements (or their renegotiation or elimination). Renegotiation of confidentiality provisions and the like are also good provisions to include. The employer and employee may like to agree upon a characterization of the termination as well, with the addition of a non-disparagement clause.

The level of obtainable severance benefits for a terminated employee is highly dependent upon the size and financial condition of the company. The circumstances surrounding the employee’s leave should not be ignored, including the length of the employee’s service to the company and the reason for termination. An employer may wish to consider the amount of time required to permit the employee to find an equivalent position without suffering economic hardship. An expressed rule of thumb is to expect a month’s salary for every $10,000 in annual pay, but every situation is different.

If you have further questions on this hot topic or any other issues related to Employment Law, please contact Guy Milhalter with Anderson Jones, PLLC by email or telephone, (919) 277-2541.