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The company can hardly expect to get much of a return from an employee it just terminated.From a rational economic perspective, though, these companies arguably earn a reputation for fair play among the small universe of potential employees for top positions.If they did not do so, their employer may still agree to pay them severance at the time of their termination, but in exchange for an agreement not to sue and a general release of rights.Both types of agreements are examples of bargained for severance agreements.
Union employees covered by a collective bargaining agreement (CBA) could receive severance pay if it is a negotiated benefit in the CBA.
Severance pay agreements also include severance pay clauses in employment agreements negotiated at the beginning of employment.
Unless the parties agree otherwise, the law presumes that their employment relationship is “at-will.” This means it lasts only as long as both parties want it to last.
Either of them can end it at any time, for any lawful reason, or even for no reason at all. Once either party ends the employment relationship and the employer pays the employee amounts earned, the employer’s obligation to pay an at-will employee ends .
After that, employers have no further obligation to pay anything to at-will employees, including severance pay.