In recent years, bonuses have become an important element (in some cases more than base salary) of individual compensation. It is therefore important for workers whose employment has been terminated to ensure that the severance contract includes compensation for the shortfall. For employees, it is important to understand that, depending on the terms of the bonus plan, the worker is generally entitled not only to bonuses earned before the termination of employment, but also, possibly, to lost bonuses that the employee would have earned, but to terminate the employment, during the reasonable notice period. Car allowances and other expenses paid by the employer have also become an important part of executive compensation. Employers will often try to exclude these expenses and benefits from the severance package process by asserting that car compensation and other expenses are actually paid by the employer, since these expenses are necessary for the worker performing his or her duties. The employer may consider that the worker is not entitled to such expenses under a redundancy agreement, since the worker no longer performs the role and duties that made those expenses necessary. As a general rule, employers want the terms of severance pay to be treated confidentially, especially when the worker receives special attention. As a general rule, the employee accepts the duty of confidentiality, with the exceptions: (i) the information provided to family members; (ii) information provided to the employee`s advisor, accountant or financial advisor; (iii) declarations to public or tax authorities; and (iv) statements resulting from legal or arbitration proceedings resulting from the compensation agreement. Employers will often also offer coaching to the outplacement executive to help management secure alternative jobs elsewhere. Similarly, the severance agreement should also cover the executive bonus – both for the payment of a bonus earned but not yet paid, and to claim a bonus paid on a pro-rata basis for the current year. The pro-rata bonus is particularly important if the dismissal is to take place more than six months a year.
As far as the financial side of things is concerned, much will depend on the executive employee`s employment contract. This is not always the case, but it is very important that management consider the possibility of termination when they are in contract negotiations with respect to a new role. Indeed, the length of their notice often has a considerable influence on the amount they can negotiate in the event of dismissal. Executive severance pay can be a complex legal area. A severance package is not a legal cookie cutter agreement, but will likely include a large number of specific provisions that will apply to the circumstances of the workplace position. A severance contract may be a lump sum payment or a salary over a period of months. In the absence of a lump sum payment, the contract can pay an executive`s salary for a period ranging from several months to one year or more. The following is an example of a severance package program that we describe in more detail in How to Negotiate a Employment Contract. Since 1980, demanding businessmen have been counting on George to apply meticulous preparation, attention to detail and dedication to his clients, which he learned from legendary lawyer Louis Nizer.
A graduate of Harvard College and Harvard Law School, George has 35 years of excellent experience in deal-making, litigation, mediation and arbitration, with whom he has negotiated large-scale agreements for selected executives and professional clients in the United States. In recent years, employer contributions to pension plans and/or RRSP have become a lucrative and attractive element of executive compensation.