Is a signed employment offer letter outlining severance package legally binding?

Company was sold by owner. My husband was VP. Given 2.5 weeks notice. Has
employment offer letter that states a severance arrangement of 3 months salary.
Owner is not honoring the letter.

Asked on May 1, 2016 under Employment Labor Law, Pennsylvania


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

A signed employment offer letter *may* be legally binding. It depends on the exact circumstances and timeline: if the letter was given before your husband made the decision to take the job, it is likely binding, since it became part of the "consideration" (what he was offered) for the job. If he had already decided to take the job, then the offer of severance was offered gratuitiously (for nothing; freely) and would not be binding. This, though, is a general statement: because all agreements are governed by their specific or precise terms, you need to look to exactly what the letter says as well.
However, that is not the end of the analysis. You say the company was sold by the owner; if your husband was not terminated as part of the sale, but had the chance to keep working with the new owner, then he was not terminated--the sale of the company does not, by itself, trigger termination or the severance package. If, however, his employment was in fact involuntarily terminated as part of the transaction, then if the letter did establish an enforceable obligation, he may be entitled to severance.
Even if there is an enforceable severance obligation, there is the question of who has to pay it, which depends on how the company was structured (e.g. was it an LLC or corporation) and how was it sold. 
Since the specific facts are so critical, your husband is advised to bring a copy of the letter to an employment law attorney to review with him at length.

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