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Chris The Lawyer
Chris The Lawyer, Lawyer
Category: New Zealand Law
Satisfied Customers: 22977
Experience:  38 years qualified as a lawyer; LLB, MMgt and FAMINZ.
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I have a very complexed situation. Family business, husband,

Customer Question

I have a very complexed situation. Family business, husband, wife & son. Son wanted to purchase all our shares which didn't eventuate due to monetary value of shares. If son did virtually not get what he wanted he would resign. Hence is resignation was accepted. Now we are under negotiations to a reasonable deal but seem to be getting strung out to dry. He is claiming a severance package of 6 months salary package and no fixed end date while he find alternative employment. I can not get my head around the word severance as he has not been fired or made redundant he has chosen to resign. We want this situation to be amicable as it is family and we are happy to come to some arrangement, but not be held to ransom. What is your opinion on this so called severance pay
Submitted: 1 year ago.
Category: New Zealand Law
Expert:  Chris The Lawyer replied 1 year ago.

There is no entitlement to a severance package, which is really a form of redundancy payment. This can only be an entitlement when there is a specific term in his employment contract. I appreciate that this is a family situation, but in terms of employment law, if he has chosen to resign then all he is entitled to is his pay up to the date he finishes and any accrued holiday pay. There is no legal entitlement to any other payment like severance pay. So you can tell him that employment law is very clear that there is no entitlement, and that while the family relationship is important, it could conceivably be a breach of your duties as directors of the company to make a payment like this was no entitlement. You also need to fix a date when he finishes normally up to 4 weeks from resignation would be appropriate. So the next step will be to tell him the finish date and that he won't be entitled to any other payment