Posted by Greg on 12/20/05

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Can a company be inconsistent with its severance payments?

The company I work for was purchased by another entity 18
months ago, and that entity recently decided to exit the
business we are in. It is not selling our small
subsidiary, but rather assigning the client contracts over
to another company.

All employees that work for the subsidiary being closed
down had the opportunity to interview with the company that
is taking over the assigned client contracts. We will all
remain employees of our current employer through a set
date. At that time, those who are offered positions with
the "new" company will begin their employment with that new
entity with no severance from the current employer.

All those who are not hired by the new company will receive
full severance benefits, regardless of whether or not they
have found new employment. In fact, those who will not be
hired by the new company can find other employment, leave
before their defined "end date" (when those who ARE hired
become employees of the new company), and still collect
full severance.

I have never heard of a company paying severance to all
employees being terminated (in this case, due to a shut
down of the subsidiary) EXCEPT those who are going to work
for ONE specific company.

The current employer believes that it helped those who will
be hired by the new company get a job by in
effect "introducing" them to the new company. Therefore,
it does not believe it should pay those employees
severance.

There is no contract with the employees requiring
severance, so there is no legal requirement that the
company pay it. I have to believe, however, that they have
to be equal in how they are paying it.

If I'm hired by the new company and start with them on
2/16/2006, I get no severance. My coworker might not be
offered a job with the new company and instead get hired by
some other company, have the same start date of 2/16/2006,
and get paid full severance.

In my case, the amount would be approximately $ 15,000, so
I'm wondering if anyone has any thoughts on this one. If
the purpose of severance is to cover a period while the
employee looks for new employment, then why would it be
paid to ANY employee that has found employment as of that
last date, regardless of who the employer is?

Inconsistent severence payments, 12/20/05, by Greg.

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