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I've been at my company for several years, and lately I've grown frustrated and increasingly stressed out due to changes at the company. The quality and quantity of my work has plummeted over the last year, and ultimately I've decided to quit my job. I met with my manager and offered my resignation.

He spoke with HR, and they told him that I have two options:

  1. If I quit, there is no severance package, and my health insurance ends immediately.
  2. However, they said they could instead fire me, and I would receive 10 weeks of pay, an extra month of company paid health insurance, and the option to continue on the company health insurance (though I pay for it).

At face value, it seems like there's a very significant advantage to being terminated, instead of me resigning. This seems counter-intuitive to me. Either way, I'm effectively leaving the company on good terms, so why would the company only offer these benefits if I am formally fired? Doesn't this add additional costs to the company, such as having to cover unemployment claims if I were to seek unemployment benefits?

What are the potential ramifications to me if I decide to take their offer of being terminated? (I'm in the United States.) My manager has agreed to write me a letter stating that the decision to leave was a mutual one, so I would have documentation if a future company inquired with my current company if I was terminated.

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    In normal usage you wouldn't talk about being "fired" if it was voluntary. "Fired" implies not only that it was involuntary, but that it was because of your performance. "Laid off" would be a good way to describe what happens to you. – DJClayworth Aug 20 at 19:44
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    @DJClayworth "Laid off" has implications for unemployment insurance, seniority (where such contracts apply) and other legal matters (warning period). I think the most accurate term is taking "voluntary redundancy/separation/severance". – user71659 Aug 20 at 20:31
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    Honestly, I think that there's something fishy here if you're describing it accurately. As @JoeStrazzere points out, COBRA is an entitlement that the company has no option but to provide. It sounds like they are trying to pay you to let them fire you. This could be for any number of reasons. If they got a PPP loan, they might think that firing you has some kind of impact (it doesn't). They may be planning big layoffs and they're trying to avoid falling under the WARN act. There might be something in your employment contract (options, bonuses) that they're trying to avoid paying out on – Dancrumb Aug 20 at 21:35
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    In certain jurisdictions, another advantage to being fired is that otherwise you wouldn't be able to claim unemployment benefits. – henning -- reinstate Monica Aug 21 at 15:14
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    To the other commenters, you can't just call it "laid off" if you're not actually eliminating that position, and it can lead to legal issues if you do. If you intend to refill the position, then fired or quit are your only two options. – mxyzplk - SE stop being evil Aug 21 at 17:41
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What are the potential ramifications to me if I decide to take their offer of being terminated?

Seems like your company is being very nice. I see no significant downside to taking the offer of severance.

You will have to indicate you were fired, if asked during an interview. But you could also explain the offer you took.

Make sure you are fully prepared to explain why you were ready to quit without having a new job lined up first. Sometimes that is important to a hiring manager. Make sure you can explain how, though your decision to be terminated was a mutual one, you will be a better long-term fit in the new company. Explain how you won't get frustrated and stressed and quit the new job.

Assuming you serve out a notice period, make sure you do so while working very hard and remaining very professional. A letter from your manager is interesting, but you don't really know what will be said during a reference check phone call. You want to leave on the best possible terms.

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    What about unemployment? How will the choices affect the OP's claims? – thursdaysgeek Aug 20 at 15:16
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    @thursdaysgeek, some Unemployment claims can become "null and void" if you quit, so getting fired under mutually agreed on terms is generally better, since they aren't likely to block the claim, as "fired with reason" can also block Unemployment claims. – computercarguy Aug 20 at 21:07
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    "You will have to indicate you were fired, if asked during an interview. But you could also explain the offer you took." He doesn't have to use the same term to refer to the ending of this relationship in every context. It is perfectly acceptable to use different terms to refer to the same thing in different contexts, especially when doing so prevents confusion and misunderstandings. In an interview context, the term "fired" falsely conveys the notion that he had no option to stay, so he should not use it in that context. No reason to create a false impression only to have to correct it. – David Schwartz Aug 21 at 0:11
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    "You will have to indicate you were fired, if asked during an interview." Can you be more precise than that? I don't see any way that this is true. If OP says "I decided to leave the company, but the company agreed to word it as initiated by them for severance package reasons", the company's description would presumably not contradict that. – Acccumulation Aug 21 at 1:28
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    It seems like the entire problem could be worked around if the OP and the company agree, presumably in writing as part of the severance agreement, that they're leaving because they're taking a buyout (which is, in fact, the truth) and not being fired. And then if anyone asks if you were fired, you can truthfully answer that you took a voluntary buyout. – Zach Lipton Aug 21 at 20:01
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Initially, I added this as a comment, but I think that it warrants a full answer.

The company is offering you 2 and a half months of pay, plus a month of health insurance. This means that they're also paying all the associated costs and taxes that you don't see. (The offer to stay on company insurance is bogus as COBRA takes care of this).

In return, they are asking you to let them fire you, presumably "with cause".

Thus, they are offering a lot of money to someone who is intending to leave, just so that they can call it a dismissal rather than a resignation.

Regardless of how "kind" a company is, this goes beyond kindness. There's a motivation here.

It may have nothing to do with you. For instance, they could be planning a big layoff that would fall under the WARN Act. Getting rid of employees through dismissal might help them avoid this.

There could be some internal politics or numbers that they are seeking to tweak to keep their voluntary attrition down.

It might have something to do with you. Maybe you forgot that you have a bonus or options or some other clause that would provide you with money unless you are fired.

Perhaps they are going to use this offer as leverage to get you to sign a non-compete or non-disclosure agreement.

I'd look very hard at what the consequences of letting them fire you are before you agree to anything.

This is not a free lunch.

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    Re: "I'd look very hard at what the consequences of letting them fire you are before you agree to anything": The OP clearly feels the same way -- hence the question. ;-) – ruakh Aug 20 at 23:17
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    COBRA vs. staying on the company's insurance may not be bogus; COBRA allows continued coverage, but probably not at the same cost (to the employee). COBRA is still an option even after the 1 month of continued coverage. – spuck Aug 21 at 0:12
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    I think the "hard looking at consequences" should involve a lawyer. It is possible that the company, or specifically the people making this decision are just being nice, but I agree that it doesn't seem that likely. – Tomáš Zato - Reinstate Monica Aug 21 at 13:47
  • re" COBRA cost - (ex) employee pays 100% of the cost - so usually a lot more then their previous company plan subsidy – Michael Durrant Aug 22 at 14:27
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    -1, "they are asking you to let them fire you, presumably 'with cause'". The "with cause" language would be of major significance, and I don't see any clue in the OP's story that's the case. – Daniel R. Collins Aug 22 at 23:47
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In the US, this is generally just a sweet deal.

You get a very nice cushion of severance, and some medical insurance paid for and then defrayed cost after that (COBRA rates are always higher). Fired (not for cause) is much better in most states for unemployment claims than quit, as well. If they do give you a letter about "mutual separation" then you're golden.

Though you are suspicious of this kindness, the things they could want are mostly harmless.

  • They may just be thankful for your work and want you to return to the industry workforce with a good impression of them (yes, this happens. My company just recently has let people go with way more severance than is necessary because we try to do right by people.)
  • They may get a longer notice period (you don't specify)
  • They may want a NDA/noncompete/non-disparagement signed (well worth it for this amount of $ IMO)
  • They may want their internal stats to look better (why do you care?)

The only possible down side is if you have some contract (unlikely in the US) or equity (more likely) that means you forfeit something if you are fired, though you don't mention anything of the sort.

This happens, and it's a good deal compared to "I just quit" or, worse, "I just got fired with zero severance," which is well within their rights in most places and situations in the US. Don't let conspiracy theories talk you out of money equal to 3 months of salary.

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I've been at my company for several years, and lately I've grown frustrated and increasingly stressed out due to changes at the company. The quality and quantity of my work has plummeted over the last year, and ultimately I've decided to quit my job.

When you talked to your manager and/or HR, did you tell them specifically that your stress and frustration was caused by actions taken by the company? If so, that could explain their offer. Severance packages frequently come with a release where both sides certify that they have no remaining claims or legal issues against the other. By offering you a severance package, the company could get assurance that you won't file a lawsuit, a worker's comp claim, or other type of legal complaint against the company for causing stress that led to medical or emotional issues. The total cost of your severance package would be cheaper than what they'd have to pay a lawyer to handle that sort of legal complaint, even if the case never made it to court.

If that's the case, then the big downside to taking the severance package is that you could forfeit your ability to file such a legal claim. If you weren't even planning on doing that sort of thing in the first place, then it shouldn't really matter.

If you do decide to take the package, make sure to discuss how your job's ending will be officially recorded. "Fired for cause" has implications for things like eligibility for unemployment benefits, plus it's hard to explain to future employers. Quitting with no severance is probably better than agreeing to be fired for cause. Ideally your job can be classified as a layoff but as mxyzplk mentioned in a comment on the question, the term "layoff" has legal implications that might complicate things. If your employment is governed by a contract, there may be additional options like a contract buyout.

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    "Severance packages frequently come with a release where both sides certify that they have no remaining claims or legal issues against the other." This is almost certainly the right answer, there's probably a mixture of reasons but this is the primary one - getting the formal release has value to the company and they're willing to share that value with you to make it happen. – Alan Dev Aug 22 at 6:51
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Either way, I'm effectively leaving the company on good terms, so why would the company only offer these benefits if I am formally fired?

Notice weeks are usually not a kindness, but rather a legal obligation. The law can stipulate that the "surprised" party (i.e. those who did not initiate the termination) is entitled to a grace period to be able to prepare for said termination.

The absence of such a notice period would put a significant impact on the surprised party, and it would disproportionately affect an employee (whose sole source of income has disappeared) compared to a company (who loses one staff member out of presumably many, but not their source of income). Because of that, company-initiated terminations (where the employee is the surprised party) can require a longer notice period so as to ensure that the employee is able to prepare accordingly.

In my local culture (Belgium), the notice period/severance pay can be up to twice/thrice as long if a company fires you, compared to you handing in your resignation.

Doesn't this add additional costs to the company, such as having to cover unemployment claims if I were to seek unemployment benefits?

Saving money does not seem to be the company's main goal here, as they are already aware of how firing you costs them more money (severance pay). So your question may be valid but seems to be irrelevant to judge the company's current goal.

What are the potential ramifications to me if I decide to take their offer of being terminated?

The main issue with being terminated is that future employers are likely to assume you were fired for not being an adequate employee. That is not provably correct, but the inference is often made.

Your manager offering to write that letter stating mutual agreement about the termination somewhat alleviates that concern, but not fully.

An employer who would already have assumed negative things about you as an employee based on being fired, may also assume that this letter was written to try and hide that fact, and thus ignore the letter (or even use it as further proof that there is something undesirable about you as an employee).

But I can't make any guarantees here. The letter might sway people, or it might not.


There is one more avenue to consider: what is the company getting out of this?

It's not impossible that this is pure kindness, but it's also possible that the company is getting something from it. There's two options I can think of:

  1. They could want/need the longer notice period

If the notice period for termination is longer than that for resignation, they could be trying to ensure you have to stay longer than you would otherwise be required to be.

  1. They're trying to hide that you chose to quit, presumably from other employees

I've worked at companies where employee morale was consistently low, and if a liked employee quits, it may spur others on to do the same. Or at least the company fears that this may happen and would rather pay you severance than risk multiple employees quitting.

Is that likely in your case? I can't say. But I've seen this happen in other cases.


At face value, it seems that the company is showing you a kindness by giving you severance. With the letter in hand, there may be little to no consequences (that negatively impact your life) from having been fired instead of resigning.

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    "Notice weeks are usually not a kindness, but rather a legal obligation." That depends very much where you are. In the US, particularly the "right to work" states, they are a kindness - and this question is tagged "united-states". – Philip Kendall Aug 20 at 12:14
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    @PhilipKendall: Hence the "usually". I do conclude the answer that it seems to be used here as a kindness (regardless of legal obligations or not), so I'm not actually suggesting that it is due to legal obligation. By the way, the question also wasn't tagged as US when I wrote the answer, so my answer's phrasing doesn't account for it. – Flater Aug 20 at 12:25
  • I'd definitely think that the company is doing this for its own reasons. I can't see anyone giving away 20% of the OPs salary in order just to be "nice". – Peter M Aug 20 at 13:23
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    @PeterM, there are a couple of reasons I can think of to be nice. The movie "Extraordinary Measures" is one example. Or ,in a small company, when people are very good friends or even related, this could be something done, but it sounds like it's not applicable to the OP. There's definitely some extra motivation here, but I can't think of a downside, unless the company is going to try to pin some extortion or embezzlement, but that doesn't jive with the letter by the manager. – computercarguy Aug 20 at 21:19
  • @computercarguy I'm not saying there is a downside for the OP, but given the OPs description that he is quitting because of how bad the work environment currently is IMHO it raises eyebrows as to why his company is suddenly being nice to him. – Peter M Aug 20 at 22:09

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