Severance is a hot topic these days in employment law. Is an employee entitled to severance? Ask a New Jersey employment lawyer and the answer will probably be no. There are exceptions such as a contractual agreement with the employer that the employee will receive a severance upon termination, but such agreements are rare and not common amongst the majority of the workforce.
So, without a legal obligation why would an employer offer a severance? The answer is simple. The employer offers the severance in exchange for the employee's release of any and all claims the employee may have against the employer up to the date the severance agreement is executed by the parties. When an employee releases his claims against the employer in exchange for compensation, the employer is virtually guaranteed that the employee cannot sue the employer for claims under the New Jersey Law Against Discrimination, as well as other employment laws. This provides a level of comfort to the employer.
Quite often, the employee and employer negotiate the terms of the severance depending upon the particular facts leading up to the layoff, termination, or resignation of the employee. The negotiations may include the following: amount of the severance; the continued payment of health benefits; references; the employer's position on whether to oppose unemployment; the offering of job placement services; the employer's position on how to respond to regulatory agencies for a professional position. The terms and conditions are not limited and the parties are generally free to craft an agreement which will leave both parties feeling comfortable about the termination of the relationship.
