"Good reason” looks at changes made by the employer to the employee’s working conditions, like a reduction in pay, loss of responsibilities or a downgrade in title.If an employer fails to pay severance promised in an employment agreement, the employee can pursue a breach of contract claim.A severance benefit in a union contract looks like an ERISA severance pay plan, but is regulated by federal labor laws.
Taxes on employers fund unemployment compensation benefits and each state administers. For at-will employees, unemployment compensation benefits fill a function similar to severance pay, providing cash when needed most.
Employers can offer employees severance pay benefits in the event of certain job losses, like from a reduction in force.
Employees can also bargain with employers over severance pay at the end of their employment relationship.
The employer may want a clean break and a promise by the employee not to suet.
Either of them can end it at any time, for any lawful reason, or even for no reason at all. Once either party ends the employment relationship and the employer pays the employee amounts earned, the employer’s obligation to pay an at-will employee ends .
After that, employers have no further obligation to pay anything to at-will employees, including severance pay.At one time some employers paid departing executives severance pay without any obligation to do so, and sometimes without requiring a release of rights in return.From the point of view of an owner or stockholder, voluntary severance pay to a departing executive is problematic.Severance pay agreements also include severance pay clauses in employment agreements negotiated at the beginning of employment.Unless the parties agree otherwise, the law presumes that their employment relationship is “at-will.” This means it lasts only as long as both parties want it to last.Employers can voluntarily pay severance to employees, and some used to do it.