Collective Agreement Severance Payments

As a general rule, claims under the Employment Age Discrimination Act (ADEA), which prohibits employers from discriminating against employees aged 40 or over on the basis of their age, cannot be waived unless certain requirements are met. Waivers of ADEA claims in severance agreements are only enforceable if, in addition to meeting other requirements, the employer gives the employee at least 21 days to review the waiver (and at least 7 days to revoke it) and advises the employee to consult with counsel. “With respect to the $500 payments to the other three claimants, the employer referred to them as `severance pay.` However, that designation did not necessarily establish that it was severance pay … Unlike severance pay paid upon termination of an employee`s services to fill the employee over a period of unemployment, these payments were made a few weeks after the end of the employment relationship. . . . In addition, the employer denied the union`s severance claim, but then decided, on its own initiative and without legal obligation, to give $500 to certain employees selected on the basis of their service within the organization. On the basis of those facts, I consider that the payments were bonuses received during the applicants` periods of employment and that they were therefore wages attributable to the respective periods prior to the termination of their employment relationship. The severance plan is designed to help employees whose income is unexpectedly cancelled out by dismissal due to inventory reduction. The provisions of the severance plan for employees of the collective bargaining unit correspond to the applicable provisions of the collective agreements.

The Employer reserves the right to modify or terminate this departure plan at any time and for any reason whatsoever. If the severance plan is not governed by ERISA, claims for benefits (“wage claim”) may be filed with the HQ Labour Standards Enforcement Division (also known as the Labour Commissioner) or in court (including Small Claims Court if the claim is less than $10,000). To file a lawsuit in Small Claims Court, follow the step-by-step instructions here. Any severance agreement for employees over the age of 40 must refer to the Employment Age Discrimination Act to inform the employee of his or her legal rights. That depends. To determine if you are eligible for unemployment benefits, the Department of Employment Development (ESD) first checks to see if you have suffered a pay cut through no fault of your own. A severance package is generally not considered a continuation of “wages” for UNEMPLOYMENT PURPOSES, so even if you receive severance pay, you are generally still eligible for unemployment benefits. The plaintiffs argued that the severance pay and dismissal payment were not wages “because these payments are not compensation for services, but partial compensation for the anticipated loss of future income, the current need to retain and acquire new skills, and the need to seek and acquire new jobs without seniority rights.” The claimants argued that severance and dismissal benefits were not paid for a specific week, but were based on services provided prior to termination of employment. An employee may waive the right to participate in disputes brought as a class, class or representative action as long as the claim(s) under which the action is brought are claims that can be waived in a departure agreement. The tribunal found that the payments made by the employer were in fact severance pay and not wages.

The California Supreme Court ruled in Powell and Byrd v. California Unemployment Insurance Appeals Board (63 Cal. 2d 103, 1965) that severance and severance pay was not wages for unemployment insurance purposes. “Although the amounts paid were designated in the collective agreement as severance pay, it is clear that the primary purpose of the payments was to encourage claimants to make themselves available for employment during the 1955-1956 season, not to double unemployment insurance benefits. Accordingly, we determine that the payments contained herein were a bonus. and duly assigned to the period prior to the termination of the employment relationship. The court noted that the payments were clearly not continuous salary payments within the meaning of P-B-4, since (1) the payments were available to a class or group of workers and (2) the payments were made in accordance with a plan that the company had developed for the closure. If rumors of layoffs are circulating in your office, the option to quit before the axe falls may tempt you, but staying can put you in a position to apply for unemployment insurance and receive severance pay. Prepare in advance, whether you expect to be fired or not. Review your resources and critical expenses to determine your financial needs. .