The Impact of Employers Not Honoring Severance Agreements
Many readers will understand the topic of this story, or rather have experienced it in their personal life, in one way or another. When the company you have worked for, sometimes for many years, has failed to live up to a pay-out legacy it has established with other employees, the feelings are understandably unpleasant. Seeing former colleagues depart, perhaps having received more favorable pay-out terms than yourself, may further exacerbate these feelings into anger and resentment. But there is actually not just a legal component to the issue, but also a lesson in culture and the workplace. And herein lies the purpose of writing about the problem.
A practical point needs to be made right off the bat. One may spend a great deal of time discussing the dissolution of a workplace relationship with one’s own lawyer, or even with the opposing counsel. It is possible, in addition, that the issue may become a cause for motives external to the employer. As this writer has seen situations where the employer had clearly acted illegitimately, it is not sensible to go right into litigation without analyzing the potential consequences of such proceeding in a given industry. Accordingly, the employment lawyer should think long and hard about what a protracted legal battle might do to the person on the other side of the discussion when all is said and done. The employer may need to maintain or regain a reputation of integrity as far and as long as at all possible. The impact of legal action on a reputation is therefore a critical component of the decision to either pursue or avoid protracted litigation.
This raises the question about how the employer not honoring severance agreements can affect workplace culture.
A cafeteria dispute can certainly lead to a loss of faith in the understanding that a favorable workplace climate can be honored. Where the employer itself appears to have violated the promise it previously made, everything is called into question. How much faith can the average employee have in management if the latter seemingly do not respect their own word? Such an entire workplace culture can be and often is destroyed as a direct result of the breach of an agreement. The employer now forfeits the trust of not only those who were abandoned – but those who remain.
This can go very far in terms of having a broad effect on a workplace. When one separates with an existing or former employer, a line is drawn in the sand such that the employee now either has hidden knowledge of the workplace system, or he does not. Either way, the next batch of employees, if they have witnessed the past conduct of their employer, may view it differently than those who merely signed on and were never privy to the circumstances. Trust becomes an issue – and now an employer which is accustomed to an environment of harmony and devotion suddenly faces a diminished workplace culture. How to overcome it? May as well keep a clean sheet, as many have said. As an employer, keep the promises you make.
Not to mention the fact that sometimes cultural disparities can play a role in how the employer not honoring severance agreements affects individual employees. Without entering into a greater discussion about varying cultural patterns now afield of the law, it might be worth mentioning that some people simply do not take a piecemeal approach to workplace rights. In a given situation, say, an employer terminates its agreement with an employee as to the one-time severance pay, the affected employee may view the lack of compliance with that agreement as a mindset that is now shared by any other employee, by the employer. More to the point, an archivist employed by a small business who has been told he or she would be completing a year-long project and was to be paid a portion of the fee the company received from the client once the work was completed suddenly found that the company was refusing to honor the agreement with reference to the fee, the archivist would now understand that management will not honor agreements and will deviate from promised conduct. The result? The archivist will now be gone, and the company may be unable to restore the integrity it once had.
Certainly, then, the employer not honoring the severance agreement will have a direct result on the company’s culture. But, more often than not, the matter is best played out by agreement of the parties rather than protracted, drawn out litigation.
