Is it legal when the company you work for is closing your facility and offers you employment elsewhere?

UPDATED: Sep 30, 2022

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Is it legal when the company you work for is closing your facility and offers you employment elsewhere?

I have been told my company will close and have been offered an option of employment elsewhere or severence pay for years of service. The problem is if I take the employment else where, I lose my severance. The 2 companies are separate and not affiliated. However we are told that we can either take the severence pay or take the job with the other company. I think if your company closes the door you should get your severnce and the other company even if they offer you a sign on bonus should have no effect severence. It was offered either one or the other; 2 separate companies. It sounds like a deal made between the 2 companies to save money. It just isnt fair. They should get the severence and the sign on bonus.

Asked on June 24, 2016 under Employment Labor Law, New York


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

The issue is, there is NO requirement to offer severance whatsoever: it is 100% voluntary on the part of a company to give employees severance. Since it is voluntary on their part and not required by law, a company is free to put any terms and conditions it wants on severance--including that if you accept offered employment, you do not get severance. So this is perfectly legal.
It's also fair if you think of it this way: if you take the employment elsewhere, you are still working--the employer may change, but you are still employed. 1) If you are still employed, why would you get severance if the name or ownership of your employer changes? You would not be offered severance if a larger company bought your company, changed the ownership and name, but you kept working. 2) It's generally better to have a job than severance--many people would be very happy if their employer arranged for them to be employed elsewhere. (For example: my wife is losing her job due to corporate solidation; she'd much rather have been offered new work than severance.)

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