Does A Severance Package Equal Termination?
February 7, 2008 by Darlene McDaniel
Filed under Jobs
Does a Severance Package Equal Termination? In a word “yes“. But take a look at this question I received tonight that sparked this post:
“Is it considered being fired when you negotiate a severance package and agree neither you nor the company will ever talk about the reason for you leaving (although they wanted you to)?”
Let me begin this response by saying the reason people get Severance Pay or Packages from organizations are for being terminated for poor performance, being laid off, outsourcing, mergers and acquisitions, management buy-outs, and resignations.
The reason I share these reasons is to help dispel the perception that the only reason people get Severance Packages is for people who have been fired. Not so! There are probably a few more reasons than what I have listed, but make sure you have a clear understanding as to why you are receiving one. READ the fine print in the paperwork. Get an attorney to read it, if you are not sure.
Here is another perspective I found on a legal website called NoLo, “Many employers routinely give severance packages to long-term employees who are fired for reasons other than serious misconduct, even if they are not legally required to do so. Why? To soften the blow of being fired and to buy a little insurance against lawsuits. A severance package may help sweeten the sour grapes a worker feels about being fired. And a happier former employee is a less litigious former employee.”
Here is my bottom line answer for this very interesting question: Depending on the wording of the Severance Agreement, if there is nothing in the documents that indicates you have been fired, then you don’t need to say you have been fired.
People and organizations make agreements daily about severing their working relationship. If there is an agreement to sever the relationship, make sure you are crystal clear about why and how the agreement came to be. Confirm what they will say to anyone calling to verify employment. Make sure you are comfortable with what they will say. As long as you are clear about why both parties are agreeing to sever the relationship, you should be fine in communicating that reason to subsequent employers. If the reason is for poor performance, than you need to take a look at that and be willing to communicate what happened, what you have learned and what you will do differently given an opportunity to work for another organization.
I imagine most people terminated for poor performance will just remove that job from their resume.
Good Afternoon Cameron! Thanks for visiting Interview Chatter today!
What an interesting comment. As a coach, I would not recommend that you remove any job from your resume. Why? Because when organizations verify your employment, it will not go well for you to conveniently drop a job, not to mention the gap on the resume. Your thoughts?
THe problem i have is that it was never clear to me why i was asked to resign or be terminated? That is why i believe they negotiated the severance package. I was an executive never counselled or notified that they were unhappy with my performance. I truly walked in for my meeting with the CEO and this was dropped on me. When i questioned the why? I was told all the conflicts were my fault but with further questioning i was then told “you are always right” it is the way you hold on to it for so long. Now i pointed out illegal and/or unethical behaviors or situations to the CEO (i reported to). I will re-read my agreement but was asked in the interview if i had resigned in lieu of termination. Again, i saw this organization do lots of termiation without cause and without a process of documentation shared with the employee. I am just so perplexed. Thanks
As an Executive in the organization, it is not unusual that you saw alot of illegal and/or unethical behaviors at the highest level of the organization.
Let me respond to your real question of why you were terminated. You may never get the answer to that question given the climate you describe.
Many times organizations are in the practice of offering severance packages to protect them from what you know. Taking the severance package ensures your “continued loyalty.” Loyalty to hold what you do know.
Let me say at this point, I got caught in a similar situation years ago. I walked into my weekly update with my boss, I had just come back from vacation, just received a nice raise and my bonus check. When I walked into my update meeting that day to communicate what was going on with my client group, I had NO idea that my world was about to come apart.
It is now 6 years later and I realize that the severance package for all intents and purposes was to “buy” my silence. I saw lots of unethical behavior and lots of people terminated at high levels with no opportunity to change make corrections, adjustments, etc. And I became number 16 in that organization – from the time I started to the time I was offered a severance package to leave.
At senior levels, it happens every day. And it will continue to happen until we (employees) stop taking the severance packages and figure out a way to “fight back”. And hold organizations accountable for how they treat ALL employees.
So, the why behind it may never be resolved. I don’t understand to this day why it happened to me. I was an excellent employee. What I do know is that I had to move forward and release the organization, the people and myself for accepting the severance without a fight.
Today, i use my knowledge to help as many people as i can to walk through the turbulent waters in their organizations. I wish you success as you move past this experience. I would encourage you to fight if you are willing to take it the distance. Don’t open the door if you are not willing to take it all the way to full disclosure and accountability for all those involved with the antics of the organization you worked for. Whatever you decide to do, get legal counsel if you decide to fight. Document what you know and be specific and be ready for a battle.