Accepting Severance Package with Strings
11-20-12 | 08:02 AM
#51
2 Fat 2 Furious
Joined: Nov 2010
Posts: 3,996
Likes: 2
From: England
Bikes: 2009 Specialized Rockhopper Comp Disc, 2009 Specialized Tricross Sport RIP
We have an announced reduction in force, and for reasons I don't need to explain here I'm at significant risk for being RIFfed
Generally there's a severance offer based on years of service. I have not heard anything this year, but in the past it's been as much as 1 month per year of service, which would be 15 for me. I'm guessing significantly less this time, but I don't know. You're given the option of a lump sum or continued paychecks with full benefits for the duration. The cost is signing a paper saying 1) I won't sue, 2) I won't go to work for a supplier, and 3) I won't go to work for a competitor. Refuse to sign the paper and I walk out with nothing. Terminated exempt employees are permanently ineligible for re-hire.
15 months pay would be a no-brainer, a virtual lottery win. But what if it's 3 months or 2 months or 1? The reduced employment options hurt - many of my professional contacts will be unable to help.
Generally there's a severance offer based on years of service. I have not heard anything this year, but in the past it's been as much as 1 month per year of service, which would be 15 for me. I'm guessing significantly less this time, but I don't know. You're given the option of a lump sum or continued paychecks with full benefits for the duration. The cost is signing a paper saying 1) I won't sue, 2) I won't go to work for a supplier, and 3) I won't go to work for a competitor. Refuse to sign the paper and I walk out with nothing. Terminated exempt employees are permanently ineligible for re-hire.
15 months pay would be a no-brainer, a virtual lottery win. But what if it's 3 months or 2 months or 1? The reduced employment options hurt - many of my professional contacts will be unable to help.
If it means you get X months of paychecks with benefits and you agree not to go and work for a supplier or competitor during the time you're getting the checks, that seems eminently reasonable. Effectively what's happening there is that the company is paying you just as they were before, just not asking you to do anything specific with your time beyond not working for selected other companies.
If it means you get X months of paychecks with benefits and you agree not to go and work for a supplier or competitor at any time, then X has got to be pretty big to even consider it.
If it's the former case then a short period might be better for you than a longer period, you get maybe 2-3 months to find yourself another job while still being paid (assuming the contract only excludes actually working, as opposed to looking for work), and you don't end up effectively out of the loop for 15 months or more before you can work again.
I don't know the law where you live but I'd be very surprised if any company could prohibit you from working for a competitor at any time, however long it was after you left them. If that were legal lots of companies would have a strong interest in hiring anyone who looked even remotely suitable to working in their field, firing them after a month or two if they weren't quite up to the job, and thereby preventing their competition from hiring anyone with any skills at all.
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11-20-12 | 08:21 AM
#52
Senior Member
Joined: Apr 2011
Posts: 15,278
Likes: 342
From: Alpharetta, GA
Bikes: Nashbar Road
Non-compete agreements are unenforceable if they're unreasonably restrictive. From what you say here, I'd take it as more intimidation than locking you out of gainful employment.
^^ sometimes the court only throws out the unreasonable part, such as duration, too broad etc
^^ depends on state law
^^^^^ not a lawyer
^^ sometimes the court only throws out the unreasonable part, such as duration, too broad etc
^^ depends on state law
^^^^^ not a lawyer
11-20-12 | 08:59 AM
#53
You gonna eat that?
Joined: Sep 2008
Posts: 14,917
Likes: 543
From: Fort Worth, Texas Church of Hopeful Uncertainty
Bikes: 1966 Raleigh DL-1 Tourist, 1973 Schwinn Varsity, 1983 Raleigh Marathon, 1994 Nishiki Sport XRS
It seems I survived the that round, although several people I know including a couple good friends did not. I could put together a pretty solid team with people let go.
I think terminations this year allow them to charge the cost of severance against 2012, giving them a way shift expenses from 2013 to 2012. Wall Street will like that. When things turn around globally, they'll bring in college fresh-outs to fill the holes. Net result is a younger, lower-paid workforce. Wall Street will like that, as well. Meanwhile, productivity tanks in the short term as people reel from the talent that was walked out the door. Fresh-outs will take years to become as productive as the shoes they are trying to fill. Many of them won't even stay long enough for that day to come.
I think terminations this year allow them to charge the cost of severance against 2012, giving them a way shift expenses from 2013 to 2012. Wall Street will like that. When things turn around globally, they'll bring in college fresh-outs to fill the holes. Net result is a younger, lower-paid workforce. Wall Street will like that, as well. Meanwhile, productivity tanks in the short term as people reel from the talent that was walked out the door. Fresh-outs will take years to become as productive as the shoes they are trying to fill. Many of them won't even stay long enough for that day to come.
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I stop for people / whose right of way I honor / but not for no one.
Originally Posted by bragi 
"However, it's never a good idea to overgeneralize."
I stop for people / whose right of way I honor / but not for no one.
Originally Posted by bragi "However, it's never a good idea to overgeneralize."
11-20-12 | 12:09 PM
#55
Senior Member
Joined: Jun 2012
Posts: 90
Likes: 0
From: Arizona
Bikes: '86 Miyata 1000, '85 Raleigh Elkhorn (retired), 2000 Specializer HardRock
Oops, I was riffed last May. I can't really say it was due to taking a promotion though, but the whole "resrtucturing" cycle was in play. I Never looked back. I had survived several of those cycles previously and was not in love with what happens next...poor moral, inept elements of operations and all the problems that it brings.
I now enjoy cycling everyday. Arizona is pretty good for cycling, but not that strong on the job market . I still need to bridge a gap to retirement, but I am enjoying it in the mean time.
Best of luck to those in a similar situation.
I now enjoy cycling everyday. Arizona is pretty good for cycling, but not that strong on the job market . I still need to bridge a gap to retirement, but I am enjoying it in the mean time.
Best of luck to those in a similar situation.
11-20-12 | 12:20 PM
#56
Senior Member
Joined: May 2008
Posts: 2,712
Likes: 1
It seems I survived the that round, although several people I know including a couple good friends did not. I could put together a pretty solid team with people let go.
I think terminations this year allow them to charge the cost of severance against 2012, giving them a way shift expenses from 2013 to 2012. Wall Street will like that. When things turn around globally, they'll bring in college fresh-outs to fill the holes. Net result is a younger, lower-paid workforce. Wall Street will like that, as well. Meanwhile, productivity tanks in the short term as people reel from the talent that was walked out the door. Fresh-outs will take years to become as productive as the shoes they are trying to fill. Many of them won't even stay long enough for that day to come.
I think terminations this year allow them to charge the cost of severance against 2012, giving them a way shift expenses from 2013 to 2012. Wall Street will like that. When things turn around globally, they'll bring in college fresh-outs to fill the holes. Net result is a younger, lower-paid workforce. Wall Street will like that, as well. Meanwhile, productivity tanks in the short term as people reel from the talent that was walked out the door. Fresh-outs will take years to become as productive as the shoes they are trying to fill. Many of them won't even stay long enough for that day to come.
Don't get sidetracked my the minutae of taxes, non-competes and all those details. Don't fall into the trap of just hanging on and praying that it is the other guy who gets the ax, sparing you. That is not only bad business for Downtube Inc. it is hard on the emotions and attitude. Instead update your resume and start looking for another job. Maybe even get the details on how to start your own business.
You may decide to stay at your company. Or, with this fresh look you may decide to start your own company. Or, you may go to another company. Or, ????. And that is the point. You have been given an opportunity and time to make the best decision for Your Company, not Theirs.
