April 2005 Archives

Staying at Job Post Termination Notice Entitles Employee to Severance

April 6, 2005

Employee who stayed on with the company that acquired his past employer, was accused of having a hand in his old employer's accounting misrepresentations at the time of the acquisition and was told that he was about to be terminated but would receive three months severance. The employee, in reliance on that promise, continued with the acquiring company for a short time longer. Ultimately, he was terminated. In defending its decision not to pay, the acquiring company claimed that the promise was a gift and not enforceable because the employee had given up nothing in exchange for that promise. The court determined that while the employee's past work for the company was insufficient, as it had happened prior to the promise being made, his work post-notice of his impending termination sufficed, notwithstanding that the value of the severance was disproportionate to the work he did. (4/05)