Wednesday, December 8, 2010

The Spectrum of Post-Employment Negotiations

The vast majority of employees are in similar positions in respect of their legal entitlements following termination of employment - they know they have some entitlements; they don't really know the details; and, when fired, their financial security is uncertain and they're understandably reluctant to incur the legal fees associated with obtaining an opinion about their entitlements.

Employers, on the other hand, are remarkably varied. Some employers are unsophisticated and have no real sense of their obligations. Some employers think they know their obligations, but are wrong. Some employers know their obligations quite well and are prepared to enter into a reasonable settlement quickly following termination. Some employers know their obligations quite well but nonetheless prefer to force employees to stand on their rights, making only unreasonable offers (if any) counting on the employee's financial hardship to prevent them from moving forward with litigation. Large employers are generally more willing to enter into a reasonable settlement at an early stage, but that's certainly not universal.

It's a real mixed bag, and creates a lot of uncertainty for employees.

The initial offers made by employers on termination, if anything, are almost always very low. It is exceptionally rare that an employee brings me an offer for my review with the result that I can tell the employee, "Yes, that offer is in line with your entitlements." Even then, there are always enhancements to discuss - employers sometimes don't offer a contribution to legal fees (and the ones who are putting a reasonable offer out in the first place are likely to understand the value of the employee obtaining legal advice, and are more likely to pay it), or omit a reference letter, or continuation of some ancillary employment benefit through the notice period like, for example, a company-paid cell phone. But it's a rare case that these minor issues are the only ones that need to be discussed.

On the flip side, employers will occasionally make an "offer" that amounts to a thinly-veiled offer to pay their statutory minimum obligations, in exchange for a full and final release. They ask for a full and final release to be signed, without recommending legal advice, in a short period of time, in exchange for which they will pay an amount equal only to the statutory minimums. Not mentioning, of course, that they will be legally obligated to pay those amounts in short order anyways, regardless of whether or not the release is signed.

The catch, of course, is that a release signed in exchange for only the statutory minimums is unlikely to be legally binding. Some employers don't know that; other employers do, and are counting on the employee to be pressured into signing it, and later convince themselves that it's not worth paying legal fees because they signed the release, so they'll never find out that it's not binding.

Don't get me wrong: I would never advise an employee to sign a document with the expectation that it will not be binding on them. The law is always evolving, and today's trite law is tomorrow's area for groundbreaking jurisprudence. Employees should always obtain legal advice prior to signing a release.

Likewise, employers should want the employee to get legal advice, in the interest of certainty and finality. The last thing an employer wants is to pay out a small settlement, then have the employee come back at them two years later, arguing that the release is unenforceable and alleging that the employer breached its duty of good faith and fair dealing by 'pulling a fast one' with an unconscionable settlement.

I bill by the hour, so my overall bill for an employee will depend significantly on the reasonableness of the position being taken by employers (and the reasonableness of the position being taken by my client...but my clients don't generally want to pay my hourly rate to advance unreasonable positions). If the employer cooperates to find a reasonable middle ground, I've settled matters with total fees as low as the mid-three-digit range. (Usually, that's with uncomplicated fact patterns and low-value files, but the settlements in such cases are often several thousand dollars higher than the initial employer offer.)

On the other hand, if the employer wants to play hardball, we could be talking thousands of dollars, even tens of thousands of dollars in fees, if it has to go very far in litigation.

I try to give the employee as realistic an assessment of the possible and probable outcomes - what they might get and what it might cost - as early as possible in every case, but there's always uncertainty.

The drawback, of course, for an employer taking a hardball position is that, in light of their duty of good faith and fair dealing, it looks bad on them to play hardball, and they just appear to be bullies when taking advantage of their (very real) bargaining power and the vulnerability of a newly unemployed person, and that can impact their liabilities, and also have a dramatic impact on their own legal costs. As a generality, employers pay much more for their legal assistance than do employees. (I make significant effort for both employer and employee clients to keep my fees as low as possible, but there's no denying that employee counsel has to always be cognizant of the cost-sensitivity of its clientele.)

If an employee in Norfolk or surrounding areas is terminated and asked to sign a release (or not), I would strongly encourage them to consult me (or another lawyer experienced in employment law) prior to signing anything, to discuss their entitlements and the consequences of the release, and to develop a cost-effective strategy for obtaining the best possible result from the employer.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Results and accounts differ significantly on a case-by-case basis. In the event that you should contact me to retain my services, the results and accounts delivered in other matters may not be comparable to the results and accounts to be delivered in your matter, and should not be used to inform your expectations for results or fees.

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