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Dealing w/ Draconian Severance Contracts?
outOfWork asks: "I've just been recently announced that I was getting laid off from yet another dot-bomb company. I have received my papers and they are simply dragonian! I understand the need not to disclose any information on the company I was with (that's only natural; I have also signed a similar paper when I started working there anyways), however the papers they are requesting me to sign do include such terms as not being to sue (should I require to). I thought suing someone or a company was a fundamental freedom that we enjoyed here in Canada. If I do not sign these papers, they do mention that I will not be entitled to my severence's package. I'm fairly certain that several companies do these sorts of things, however do they have the right to do this? This company has had a bad reputation when it comes to how HR deals with certain issues and I'm wondering if they might be trying to pull a fast one on us. With the market being what it is, I could sure use that severence's package. Your input would be very welcome."
Cut your losses and read your original contract you had with them: does it say that you are entitled to any benefits or some kind of extra-long notice before being fired?
That's the important thing--if they are firing you before your original contract says they can (and making you leave before then) then you get whatever the contract says you get. usually it's in the form of pay that you would've made if you had worked there for the length of the notice.
Otherwise, it's just a simple matter of whatever the labour laws in the province you work say is the minimum notice they have to give you.
Don't sign the goddamn papers, and go find another job and quit whining here. Two weeks, dude. That's all anyone is required by law to give you in BC, for example.
"Draconian." Give me a break. It's not draconian if you don't sign it, right?
And if you want the severance--too bad. They're dangling a carrot in front of your nose. Bite it and you get to find out it's laced with something you knew was there to begin with. Boo hoo.
Here in the U.S. such an agreement probably wouldn't be legally enforcable. I've known of several companies which included the covenant not to sue in their severance agreements, but the courts threw it out. I think it's mostly there as a red herring - getting the court to rule on it is just an extra step you're forced to go through. And it probably has some intimidation value - people who think they've waived their right to sue are less likely to try. But as always, check with a lawyer.
I was laid of by an American company (I was part of a sales team in Canada).
The offer they are making you (if it is in excess of the minimum by law) is what the agreement is about. For example, if they offer you additional severance pay above the legal limit, you agreeing to receive that goes hand in hand with removing your right to sue.
Stay away from court if at all possible. In Canada, your maximum awarded damages are equal to your suffering due to layoff - for example, if you find work in two weeks of similar compensation, your total damages would be two weeks pay (plus any transition costs).
Focus on getting a new job - the tech industry is tough right now but there are jobs out there.
In my case, I lobbed the offer back at them and asked them to increase it based on three items they weren't aware of:
1. The laid me off one week before final closing documents on my first house purchase (and the management had known about this purchase for four months).
2. They recruited me to the position from another job.
3. In the interim time between the recruitment and my layoff, I would have vested options at my old job that would have been worth a substancial amount.
All those things being said - when I spoke to counsel they still recommended me to take the offer as it was fair and equitable considering my age (under 30), no kids, and my employability.
They ended up increasing my offer substancially (tripled it, in fact) but I would have taken it either way, as within a week of the layoff I had four job prospects.
Go, get another job. Lawsuits are not worth your time and energy (and money!). Leave the past behind, and move onto the future.
Good luck!
You can simply strike out the clause about not sueing and initial by the strikeout. Then sign and turn in. Especially if they don't check it carefully, i.e. if you turn it in to someone who is not a lawyer, it may not be noticed. What you are doing is in effect making a counteroffer. If they give you the money, it amounts to acceptance and the deal is done. If they catch it - you're just back to where you are now.
Having been caught before by contracts which seemed benign when signed, I cannot recommend enough that you get paid legal help. If this bothers you (and I guess it does), pay whatever it costs to get it reviewed by a competent Canadian lawyer. In the chance that later you have reason to sue, you won't regret it.
A lot of companies attempt this sort of thing. One reader suggested that if your dot bomb company is going down the tubes, take the money and run. He's got a pretty good point. There probably won't be anything left to sue them for, unless they were up to some Enron-style activities.
In the United States, there must be an equitable exchange in such a contract for it to be valid. Suppose they get you to agree not to sue them. Then, a while after your departure, they renege on paying you severance as they agreed. Presumably, because you signed that paper you can't sue them. But the truth is, if they don't stand by their part of the agreement, then the contract is null and void. You can sue the crap out of them and collect triple damages.
One of my favorites is the "non-compete" clause, where you agree not to compete against your former company. This never stands in court, because they can't force you not to earn a living. When another company hires you for your skills, technically that means you could be competing against your old company.
Again, in the US, if the compensation you receive is not considered equitable to the conditions that you are being asked to accept, any such contract is null and void. If the severance is good -- take it! But if you have any doubts, maybe you should seek counsel. I live in Massachusetts, and the Attorney General's office is very aggressive in pursuing companies that pull these sort of things. The office offers legal advice and free counsel for people who want to find out if they have a complaint. Maybe your province in Canada offers something similar?
I wish you the best of luck.
Whew! This water sure is cold!
This is what you need to do:
1. Sign it.
2. Collect whatever you can get them to pay you. If they pay by check, run to the freaking bank and cash that check ASAP.
3. Run like hell and get on with your life.
I was a hair short from being in your position. The day I was going to be told I was in the layoffs list I went to interview elsewhere. I went back to my office not knowing if I still had a job. The CEO told me she almost canned me but decided to leave me stay at the last second as long as I would take over the work of two expensive consultants. I said suuuure. 48 hours later I had my offer elsewhere, gave them 1-week notice (first time ever I give less than 2) and ran like hell.
I did not even sign a consultant agreement. Instead I told them that since I was a "nice guy" I was going to stay as a part-time employee. Instead of a $85/hour consultant I volunteered to be a $30/hr part time employee (they laid off 20% of all employees, and those of us that survived got cut our salaries by 20%). Why? Because the company is going down and they are going to screw all consultants, but they do not mess with payroll. I would rather get paid $30 now than have the $84/hr negotiated down to $20, and that is after 2-3 months of threatening to sue for non-payment.
Just take the money and run. Get on with your life. All that talk about the though job market is B.S. The same day I interviewed for my present job one of my friends got laid off at noon. At 2 PM he went to interview elsewhere. His offer arrived two days later, 4 hours ahead of mine.
Pedro
----
The Insomniac Coder
No most of what this person is describing is completely legal and enforcable in the US.
i na tions/sepagreementsT.htm
In the US, if you are entitled to a severance package as part of the terms aand conditions of your employment, the employer cannot require you to sign a no-sue agreement at the time of your departure in exchange for this severence since you were already entitled to it. The employee has to offer you something extra. If they try this, the agreement is valueless.
In addition there are a lot of very strict rules covering the form and execution of this agreement, especially if the employer wishes immunity from suit under ADEA. Some of these can be seen at:
http://www.cbia.com/HRBus/EmploymentIssues/Term