2 Big Companies merging = no severance package?

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JD2775
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2 Big Companies merging = no severance package?

Post by JD2775 » Mon May 23, 2016 1:23 pm

So I work for a big company who is in the midst of merging with another big company. Currently the company I work for has a 1 month pay per 1 year worked severance policy (being there 12 years I would have a decent severance coming to me, should I lose my job after the merger). A coworker of mine thinks they would screw over everyone though by merging the companies, assign everyone a new Employee ID number, and THEN lay them off. New employee = no severance. Sounds shady, but I guess it is legal. Question is, how often do you think something like that happens?

Mitchell777
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Re: 2 Big Companies merging = no severance package?

Post by Mitchell777 » Mon May 23, 2016 1:27 pm

Not sure how often it is done, but if the severance is 1 month of pay for each year worked, that is very generous.

JD2775
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Re: 2 Big Companies merging = no severance package?

Post by JD2775 » Mon May 23, 2016 1:30 pm

Mitchell777 wrote:Not sure how often it is done, but if the severance is 1 month of pay for each year worked, that is very generous.


It is, I just hope I dont lose it!

KlangFool
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Re: 2 Big Companies merging = no severance package?

Post by KlangFool » Mon May 23, 2016 1:31 pm

JD2775 wrote:So I work for a big company who is in the midst of merging with another big company. Currently the company I work for has a 1 month pay per 1 year worked severance policy (being there 12 years I would have a decent severance coming to me, should I lose my job after the merger). A coworker of mine thinks they would screw over everyone though by merging the new companies, assign everyone a new Employee ID number, and THEN lay them off. New employee = no severance. Sounds shady, but I guess it is legal. Question is, how often do you think something like that happens?


JD2775,

I do not know which state do you live in. As far as I know, all severance pays are optional. The only thing that employer has to comply with if they laid of large number of employee are WARN act. In that case, either the employer gives the employee 60 days notice or let you go earlier by paying for 60 days of severance pay.

https://en.wikipedia.org/wiki/Worker_Ad ... cation_Act

<< A coworker of mine thinks they would screw over everyone though by merging the new companies, assign everyone a new Employee ID number, and THEN lay them off. New employee = no severance. >>

The employer does not have to do that at all since severance pay are optional to begin with.

In general, I believe it will not be that drastic. Aka, no severance pay. But, it may not be as generous.

KlangFool
Last edited by KlangFool on Mon May 23, 2016 1:37 pm, edited 1 time in total.

BW1985
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Re: 2 Big Companies merging = no severance package?

Post by BW1985 » Mon May 23, 2016 1:36 pm

I suppose it could happen but I doubt it, severance packages are standard procedure at large companies in my experience.
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Re: 2 Big Companies merging = no severance package?

Post by livesoft » Mon May 23, 2016 1:39 pm

My spouse worked for a company that was sold. At the buyer's Christmas party she was pleasantly surprised that all the years she worked at the old company were counted towards her longevity award.

I think the OP's question is something that they should not worry about. After all, it is what it is. What would you do about it if it didn't work out the way you wanted it to? Would you quit? Would you file a lawsuit? :)
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quantAndHold
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Re: 2 Big Companies merging = no severance package?

Post by quantAndHold » Mon May 23, 2016 1:40 pm

In general, when companies merge, you keep your seniority for things like vacation accrual, etc.

Unless you are working under a collective bargaining agreement, severance pay is totally optional, and the company can and will change it anytime they want. It's a truism that if a company is going through multiple rounds of layoffs, the people who are laid off in earlier rounds will get better severance packages than the later rounds. In most industries, 1 month per year of service is super generous. I would not necessarily count on that actually happening.

The WARN act is a real thing. If the layoff is large enough, you'll either get 2 months warning before you get laid off or 2 months of severance (or some combination). "Large enough" is defined by federal law (you'd have to look it up), and redefined to be something stricter by several states (California for sure, I don't know about others).

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Re: 2 Big Companies merging = no severance package?

Post by MikeZ » Mon May 23, 2016 1:43 pm

I would poke around on the Intranet site, some companies have separate 'change of control severence' policies.

Usually you can read between the lines on the earnings calls to see how they are framing the benefits of the merger.

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DaftInvestor
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Re: 2 Big Companies merging = no severance package?

Post by DaftInvestor » Mon May 23, 2016 1:45 pm

Is the severance package documented somewhere or just precedent from the past?
There are always coworkers who take the most dismal view of what "might" happen.
Most companies during mergers will pay out severance (typically these costs are factored into the outcome) but it might not be as generous as what your company paid in the past.

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Re: 2 Big Companies merging = no severance package?

Post by campy2010 » Mon May 23, 2016 2:00 pm

My large employer has merged twice since I started 5 years ago. Going through the second merger right now. Both times employees were grandfathered into the new organization with their prior years of service. No resetting of the clock. That said, specific benefits usually default to what is being offered by the "purchasing" company. In my experience, good companies try to make their employees whole during an acquisition. But that is usually done in aggregate and sometimes specific benefits don't transfer unless required by law. And like KlangFool said, severance payments are optional so there are no guarantees.

I wouldn't worry about wholesale layoffs unless your job function is completely redundant with one already being done by the purchasing company. The people working for a company and their intellectual property are an asset that acquiring companies usually do their best to retain. And in my experience, it takes about a year for big organizations to review the performance of each division and to fully integrate them. By that time the writing is usually on the wall whether your job function is at risk. For now, I would ignore the "sky is falling" chatter.

JD2775
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Re: 2 Big Companies merging = no severance package?

Post by JD2775 » Mon May 23, 2016 2:07 pm

campy2010 wrote:My large employer has merged twice since I started 5 years ago. Going through the second merger right now. Both times employees were grandfathered into the new organization with their prior years of service. No resetting of the clock. That said, specific benefits usually default to what is being offered by the "purchasing" company. In my experience, good companies try to make their employees whole during an acquisition. But that is usually done in aggregate and sometimes specific benefits don't transfer unless required by law. And like KlangFool said, severance payments are optional so there are no guarantees.

I wouldn't worry about wholesale layoffs unless your job function is completely redundant with one already being done by the purchasing company. The people working for a company and their intellectual property are an asset that acquiring companies usually do their best to retain. And in my experience, it takes about a year for big organizations to review the performance of each division and to fully integrate them. By that time the writing is usually on the wall whether your job function is at risk. For now, I would ignore the "sky is falling" chatter.


Good advice, and I agree on ignoring the chatter. No sense in worrying about this stuff now. Also, my job is not one of redundancy which is good but we are located at a "remote site" of only about 85 people, so they may just shut the whole site down if anything. No idea.

Good feedback everyone, thanks!

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Re: 2 Big Companies merging = no severance package?

Post by Capsu78 » Mon May 23, 2016 2:41 pm

Good severance packages are going to go the way of pension plans, if my nose is smelling things correctly. We have been through 2, both very fair and leaving us with a good taste in our mouths- sad to leave the organization but understanding "it's just business". Left a big chunk of RSU's unripened too- but that company did help us navigate a delayed separation, at reduced monthly compensation so we could collect both a profit share and age an earlier batch of RSU's. Some people chose a "hostile" approach to the HR rep tasked with being the Reaper, and they were met with a very inflexible exit.
Current company also RIFing this year and the once stellar severance package was changed to 90 day notice of when your last day was + 1 month severance. If the Reaper comes knocking we have little expectation of getting anything else.

Luke Duke
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Re: 2 Big Companies merging = no severance package?

Post by Luke Duke » Tue May 24, 2016 2:31 pm

I would guess that you will keep your seniority and your severance policy will change to whatever it is at the new company. I wouldn't count on it being 1mo/yr.

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Re: 2 Big Companies merging = no severance package?

Post by Copernicus » Tue May 24, 2016 2:42 pm

I used to work for big companies and experienced two acquisitions. Never heard of any company giving 1 mo severance for each year of employment. Please check again. Also, check change of control severance policies. Every company has these for 'in case there is a merger or acquisition.

Never heard (except in rumors) of companies playing the game of firing and rehiring everyone to dodge severance pays.
Typical severance packages include a minimum of 2 months (WARN) period + 1 week/year of employment in either company + several months of health coverage. Early retirement is encouraged by giving additional years credit for people above 55 years. etc.

Everyone abhors a drastic change, and take a pessimistic/insecure view. In fact, this is the time to be diligent in work and attitude. Many people come out of the merger with a breath of fresh air when possibilities open up that they had not even imagined before!! Best luck!

ourbrooks
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Re: 2 Big Companies merging = no severance package?

Post by ourbrooks » Tue May 24, 2016 4:12 pm

One WEEK per year of employment is common; I've also never heard of one MONTH.

Companies which give severance pay usually require that you agree not to sue them over being let go. Given how much lawyers are paid, it may be cheaper to give you severance rather than fight your age/race/sex discrimination suit.

The problem with firing and rehiring everyone, besides the inevitable law suits, is that all the good people won't come back. I haven't ever heard of any company taking that risk.

A more real possibility is that they shut down your location and move everyone to a location from the other company. Depending on how much they want to keep you, the benefits can arrange from none at all up to buying your house and covering closing costs of the new one + all your moving and travel expenses + a few months extra salary as "curtain money."

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Re: 2 Big Companies merging = no severance package?

Post by goingup » Tue May 24, 2016 4:19 pm

Mitchell777 wrote:Not sure how often it is done, but if the severance is 1 month of pay for each year worked, that is very generous.

One week per year is common. I don't think I've ever heard of 1 month per year.
(I see ourbrooks beat me to this..)

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Re: 2 Big Companies merging = no severance package?

Post by cherijoh » Tue May 24, 2016 4:47 pm

quantAndHold wrote:In general, when companies merge, you keep your seniority for things like vacation accrual, etc.

Unless you are working under a collective bargaining agreement, severance pay is totally optional, and the company can and will change it anytime they want. It's a truism that if a company is going through multiple rounds of layoffs, the people who are laid off in earlier rounds will get better severance packages than the later rounds. In most industries, 1 month per year of service is super generous. I would not necessarily count on that actually happening.

The WARN act is a real thing. If the layoff is large enough, you'll either get 2 months warning before you get laid off or 2 months of severance (or some combination). "Large enough" is defined by federal law (you'd have to look it up), and redefined to be something stricter by several states (California for sure, I don't know about others).


My former employer was closing the site down where I worked and relocating our BU to a different site in a different state. I think everyone was given a choice to relocate or take a separation package - this all came about in the 4Q. The new site required some construction before the transfer, so when made our relocate or separate decision we had no idea when it would actually happen except for "after the first of the year". They kept pushing it out until someone realized that they still needed to give 60 days notice - even though we had been aware of what was coming for over 6 months. :oops: It was definitely hard to stay motivated for that long as a "short timer".

Random Poster
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Re: 2 Big Companies merging = no severance package?

Post by Random Poster » Tue May 24, 2016 5:19 pm

Copernicus wrote:I used to work for big companies and experienced two acquisitions. Never heard of any company giving 1 mo severance for each year of employment.


ourbrooks wrote:One WEEK per year of employment is common; I've also never heard of one MONTH.


goingup wrote:One week per year is common. I don't think I've ever heard of 1 month per year.


I wouldn't call it "standard," but I am aware of several companies in the oil and gas industry that (allegedly) provide one month per year for severance.

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Re: 2 Big Companies merging = no severance package?

Post by Geologist » Tue May 24, 2016 7:42 pm

I worked for a large oil company and was laid off after a merger. I got roughly 3 weeks severance for each year of service plus the 60 days associated with the WARN act. The severance generosity increased with seniority and some people were getting 4 weeks severance per year of service. I worked for the acquiring company (there was no specified severance policy, by the way; this is just the policy they set for this set of layoffs). The acquired company, on the other hand, had a change of control clause so its severance package was more generous.

That was about 16 years ago; I don't know what is common now.

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Re: 2 Big Companies merging = no severance package?

Post by Martin » Tue May 24, 2016 8:18 pm

The company I work for just did a downsizing. They also offered 4 weeks per year up to 1 year. I had never heard of a plan beyond 2 weeks per year. I still scratch my head trying to figure out how this saves money when positions were filled with outside contractors for as much and in many cases more money. The company offered packages every few years. Employees are now waiting for the package to retire.

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Re: 2 Big Companies merging = no severance package?

Post by noco-hawkeye » Tue May 24, 2016 8:35 pm

I would not be worried about the theory that they will renumber each employee and start everyone over. Usually a merger has some basic severance agreements at the outset, sometimes disclosed to employees. Typically senior employees would see this info. If the employer tries to do shady stuff like renumber employees, they are opening themselves to lawsuits and complaints. From the companies point of view, they would rather just pay a few weeks / months to employees and move on vs. end up with lawsuits.

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Re: 2 Big Companies merging = no severance package?

Post by dm200 » Tue May 24, 2016 8:38 pm

JD2775 wrote:So I work for a big company who is in the midst of merging with another big company. Currently the company I work for has a 1 month pay per 1 year worked severance policy (being there 12 years I would have a decent severance coming to me, should I lose my job after the merger). A coworker of mine thinks they would screw over everyone though by merging the companies, assign everyone a new Employee ID number, and THEN lay them off. New employee = no severance. Sounds shady, but I guess it is legal. Question is, how often do you think something like that happens?


I assume, then, that your current company is being acquired by the other company. Usually, but not always, you would be subject to the rules, policies, etc. of the acquiring company. However, you will probably have your number of years of employment counted after the merger.

It has been my experience that severance packages are almost never "official" publicized policies, but rather done as appropriate to the situation. I do not think it is at all shady to have lesser severance for employees let go. One month per year is very, very high - in my opinion and experience.

I also doubt, though, that you would be considered a "new employee".

Maybe you should focus on keeping your job, rather than looking for the "benefits" of a layoff.

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Re: 2 Big Companies merging = no severance package?

Post by topper1296 » Tue May 24, 2016 8:48 pm

goingup wrote:
Mitchell777 wrote:Not sure how often it is done, but if the severance is 1 month of pay for each year worked, that is very generous.

One week per year is common. I don't think I've ever heard of 1 month per year.
(I see ourbrooks beat me to this..)


Agreed. I've also never heard of one month per year of service. I've been laid off before and received two weeks per year of service.

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Re: 2 Big Companies merging = no severance package?

Post by quantAndHold » Tue May 24, 2016 8:50 pm

cherijoh wrote:
quantAndHold wrote:In general, when companies merge, you keep your seniority for things like vacation accrual, etc.

Unless you are working under a collective bargaining agreement, severance pay is totally optional, and the company can and will change it anytime they want. It's a truism that if a company is going through multiple rounds of layoffs, the people who are laid off in earlier rounds will get better severance packages than the later rounds. In most industries, 1 month per year of service is super generous. I would not necessarily count on that actually happening.

The WARN act is a real thing. If the layoff is large enough, you'll either get 2 months warning before you get laid off or 2 months of severance (or some combination). "Large enough" is defined by federal law (you'd have to look it up), and redefined to be something stricter by several states (California for sure, I don't know about others).


My former employer was closing the site down where I worked and relocating our BU to a different site in a different state. I think everyone was given a choice to relocate or take a separation package - this all came about in the 4Q. The new site required some construction before the transfer, so when made our relocate or separate decision we had no idea when it would actually happen except for "after the first of the year". They kept pushing it out until someone realized that they still needed to give 60 days notice - even though we had been aware of what was coming for over 6 months. :oops: It was definitely hard to stay motivated for that long as a "short timer".


My wife got 3 weeks of extra pay once for that. She had known for months she was going to be laid off, and that she was getting five weeks of severance (1 week per year). Shortly after she got laid off, the whole company went belly up, and it went from a small layoff to something that qualified for the WARN act, and an extra check showed up in the mail.

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Re: 2 Big Companies merging = no severance package?

Post by LadyGeek » Tue May 24, 2016 9:12 pm

Over a year ago, my employer's plant closed, so I was subject to the WARN act for real.

Get your facts from the source: Worker Adjustment and Retraining Notification (WARN) Act Compliance Assistance Materials, from the DOL. This Fact Sheet is also helpful.

My company offered relocation packages to another part of the country, but I did not want to move. Every month, they laid off a bunch of people as the plant was being phased out. With 60 days to go for my date, I received a formal notification of termination.

With about 30 days to go, I accepted another position from a nearby facility. I was able to stay within the same company and matched my salary to boot. I've been at this new position for over a year. Is it better or worse? It's just different and I've acclimated to the new environment.

So, first things first. Plan for termination. How's your emergency fund? What expenses should you cut? Is there a working spouse with health benefits? A change in employment is a qualifying event for benefits changes.

If finances are not the way you like them now, the best course of action is to reduce your spending as if you were terminated today. Once you have better insight, you can gradually adjust your plans.

Speaking of benefits, do you have a flex spending account? Max out your expenses now. When you leave the company, you are NOT obligated to pay back any balance due for the reimbursed expenses. For example, you elected $2,500 of contributions, but only contributed $100 to date. If you leave the company, the company will eat the $2,400 - you don't owe it to them. See the wiki: Distributions from an FSA, first paragraph in the section.
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