Give Me One “Good Reason”: Employee Resignations and Severance
Tracy Chapman famously sang about needing “one reason to stay here.” But when severance is involved, employees may look for one reason to leave—one “Good Reason.”
While Ms. Chapman didn’t sing about them, many employment contracts include a “Good Reason” clause, which allows the employee to resign and still receive severance if certain conditions are met.
For example, many Good Reason clauses provide that an employee can receive severance upon resignation, so long as the employee has suffered from a reduction in salary or benefits, diminution of duties or responsibilities, or due to a forced relocation. In some cases, these Good Reason clauses only apply when an employee resigns following a change in control of the employer (for example, a merger or acquisition).