A lot of the responses focus on the higher end of the pay scale and together I think there is an overall consensus on the main points.
Is "preemptive severance" actually a thing
"preemptive severance" is not yet a legal term, and Severance pay itself is not offered ubiquitously. Some unions, industries or professional organisations have policies that their members abide by that include severance pay. Some Jurisdictions require this by law.
The contract of employment may itself contain an explicit provision for a severance payment on redundancy. Although this was unusual in the past, it is now becoming more common. Alternatively, there may be an express provision incorporating an award/certified agreement that includes an obligation on the employer to make a severance payment.
Severance Pay, although named differently in some jurisdictions, if offered, it is available on termination of your employment. Many contracts will have specific terms that govern conditions around the termination that may affect the severance entitlements, some conditions may preclude entitlements altogether. Sometimes there will be clauses that specify a minimum term of employment that triggers or alters the severance entitlements, such as bonuses for long periods of service.
Is this different from being fired? Would future employers examining a candidate's employment history consider it differently?
The whole point of this "preemptive severance" is that the employee wants to leave, but they want their entitlements too! (which presumably they would not be entitled to if they quit). So from a legal sense they want their employer to fire them.
How this affects their employment history will depend greatly on how the negotiation played out.
- If the employer felt they were being blackmailed, then they might be inclined to simply fire the employee effective immediately, which would enact any standard contractual obligations on the spot.
- If the employer was amicable to the request they might negotiate a specific date that the employment will be terminated along with some criteria or expectations of duties or tasks to complete before then, such as training their replacement or handing over responsibilities.
- If the employer was supportive then they might offer a form of settlement, which from a legal sense would nullify any severance obligations and preclude you from being able to make future claims to severance entitlements in exchange for an alternate payout or set of entitlements.
How this looks on your employment history therefor becomes part of your negotiation to leave. Different jurisdictions will have legal obligations that your employer may not be able to work around or that may need things to play out in a certain sequence to be lawful.
- Understanding the legal constraints that your employer must abide by will help you in these discussions, know your rights, but know theirs too.
- Make sure you understand what you want this termination to look like on your employment history first, then take the appropriate steps to make it happen.
As pointed out by Geoffrey Brent, in Australia there is a legal term that can be used to cover the last 2 of the above list, that is Redundancy. Accepting a Redundancy in Australia for instance will affect your eligibility for unemployment benefits, and rightly so as a redundancy usually includes a larger payment than standard termination would pay out. However, there are legal precedents that determine the conditions under which a Redundancy can be offered, if this criteria cannot be met then how this looks on your employment history becomes discretional on the part of the employer, unless you make it explicitly part of any agreement you make with the employer.
Is "preemptive severance" actually a thing, or is the author just wordsmithing terminology to portray it more positively?
While not a legal term, I would say this is a creative wordsmithing terminology and I vote for its inclusion in the common employment vernacular. Have a read in Can an employee ever ASK for a severance package for an example of usage back in 2009.
Risk is a good reason to sum up why an employer might accept to offer a pre-emptive severance. Think this through:
It is a common understanding that severance is generally only offered if the termination of employment was initiated by the Employer, but there are steps an employee can take that might push the employer to the point where they would have terminated the employee anyway.
- Poor performance, employee may deliberately under perform or cut corners in their work almost to the point of becoming negligent.
- Lapse of certification, in some industries it might be enough for the employee to not renew a required certification or to deliberately fail an assessment.
- Toxic personality, its pretty easy to become abrasive to fellow employees, or clients without being openly offensive, at some point you will attract enough attention that you will be asked to leave.
A reasonable employer who is made aware that an employee wants to leave, but is hanging on until they become entitled to severance, might choose to avoid finding out what interesting tactics the employee might deploy to bring about their termination.
I once heard a story from some mates from school who started as juniors part time at a supermarket. One of the day shift workers who trained them, who was by all accounts a "cool guy" and a model employee came to them with a dilemma a few months in. He wanted to move overseas, but the opportunity was not going to be open for long and he wanted his long service leave to be paid out as he had been working for 13 years and 4 months, just 8 months away from the magical 14 years needed for his long service. He asked the local manager about an early payout, who said it couldn't be done and that if he took the request any higher he would probably be fired on the spot. What happened next was that his work ethic changed dramatically, it was the job of the juniors to cover for him when he was sleeping behind the pallets in the store room and in return he would provide lunch and snacks for them whenever needed, because he had authority to write off damaged stock and did most of the re-ordering. This and other activities fostered a general distrust of management (and an influx of job applications from school!) and created an overall toxic work culture that pretty much affected or infected everyone who worked there. Eventually a senior staff member who was fed-up with the shenanigans offered an alternate resolution, it turns out that he had a lot of sick leave banked up, that cannot be paid out, so why not use up the sick leave as he was clearly stressed out, then go on an extended holiday to use up any holiday pay that was left, then come back and work for a few weeks to meet the 14 year limit and then you will get the payout that you are seeking even if you choose to quit.
The advice was taken, but the damage was done, the shenanigans had become learned behaviours and part of culture at that workplace, customers even stopped going to the store and it did eventually close. There was no other significant changes in the local community but this perfectly situated store with good prices went from 8 checkouts with lines of customers to a single register being opened that could cover peek times and the store closing during non-peak times. In a period of less than 2 years.
My observation of the whole experience was that in the end it would have been a smart business decision to have come to an early arrangement to satisfy what would have been a reasonable request at the time.