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Does at-will employment affect someone’s severance pay rights?

On Behalf of | Oct 16, 2023 | Employees' Rights |

Many of the best jobs in Michigan are highly competitive, yet, the fact that many individuals seek to fill these roles doesn’t mean that they’re compensated well. As a result, some of the most successful professionals in Southeastern Michigan do not have enough in savings to support their families for more than a few weeks after a job loss. They may struggle to maintain their standard of living during transitions between jobs.

Executives and other well-compensated professionals often negotiate severance packages when taking new jobs specifically so they have the financial support they require if they lose their jobs unexpectedly. But, most workers in Michigan don’t benefit from a contractual right to severance. Additionally, Michigan has laws making it an at-will employment state, regardless of whether someone has a contract with their employer or not.

The law in Michigan does not promise severance pay

The statute making Michigan an at-will employment state does not influence compensation rights. It merely absolves both parties in an employment agreement from legal issues for a termination of that agreement. There are no state laws specifically requiring severance pay when someone leaves their job. Instead, severance pay obligations come from the contract that a worker has signed with their employer. Losing a job due to an at-will termination won’t automatically prevent someone from receiving their severance pay.

However, the specific details of why someone lost their job could affect their eligibility. Many employment contracts include provisions that allow employers to eliminate or at least reduce severance packages in certain circumstances, including termination for cause. Poor job performance, attendance issues and misconduct are all possible reasons for an employer to deny someone severance pay or reduce how much they offer.

Sometimes, those negotiating with an employee during the termination process will try to trick them into giving up their right to severance pay or accepting a reduced severance package. Understanding what the laws in Michigan say and what rights someone has per the nuances of their employment situation may help them obtain the best outcome in a sudden job loss scenario. Seeking legal guidance can result in greater clarity.


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