If you didn’t receive a severance package you were promised, you may have a legal claim for breach of contract.
You may have a legal claim to severance if your employer promised it or otherwise agreed to pay it. Even though employers generally aren’t legally required to pay severance, many do — and, if they have led employees to believe, based on promises, policies, or longstanding practice, that severance would be paid, employers may be contractually obligated to provide it.
Laws Requiring Severance
Generally speaking, the law doesn’t require employers to pay severance to employees who lose their jobs. However, there is an exception to this rule: In a few states, employers that conduct large-scale layoffs or plant closings are legally obligated to pay severance, provide continued health benefits, or both, to employees who are laid off. If you worked in one of these states, and your termination was part of the type of layoff that the state’s law covers, you may be legally entitled to severance.
You may also be entitled to severance if you have a contract promising it to you. There are a couple of ways this might happen. First, if you have a written or oral employment contract, it might promise severance. For example, if you signed an employment contract when you accepted your job, it might provide for severance if you are laid off before the contract ends. Or, you may have been orally promised, when you were hired, that you would receive severance if you were laid off. An oral contract is just as valid as one in writing, although much more difficult to prove. In either case, you can argue that you are entitled to severance because of your contract.
Second, you might have signed a severance agreement, separation agreement, release, or other document when your employment ended, which promised you a severance package. In this situation, as long as you have done anything required of you by the contract, you can ask a court to require the employer to hold up its end of the bargain.
Policies and Practices of Offering Severance
ome employers have severance policies in their employee handbooks. For example, employees who are laid off or lose their jobs through no fault of their own might be promised one week of severance for every year of service. If your employer has this type of policy, you may be able to hold the employer to it. A lawyer can help you figure out whether the policy is the type of promise that can be enforced.
If your employer doesn’t have a written severance policy, it might still have a longstanding practice of paying severance to employees who lose their jobs. At some point, a consistent practice like this becomes a term of employment that employees are legally entitled to rely on. Again, an experienced lawyer can help you figure out if you have a legal right to severance based on your employer’s practice or not.