[sonnyblarney]

This is something entirely different. And FYI a strong incentive for companies to never offer any kind of severance in these situations since it's all socialized.

Better to just be transparent about things so employees can properly consider the risk in the situation.

[pavlov]

The issue here is that a bankrupt company is breaking the contracts it made with employees — and you suggest it can be fixed by having employees enter into another contract with the same company. Do you see the problem?

[sonnyblarney]

No. There's little that can be done when a company goes bankrupt.

I'm suggesting if people know that the company could go bankrupt, it helps them make decisions.

And that severance is a normal part of a contract otherwise

[pavlov]

What company is going to advertise months in advance that they might be going bankrupt? That's the surest way to make it come true.

This seems like some kind of weird libertarian fantasy where companies and employees have access to the same information and use it to make rational economic decisions. In reality, almost any failing company will use its payroll obligations as a bank of last resort to squeeze out that last chance of turning things around, and there's no contract that would protect employees from that.

[sonnyblarney]

"This seems like some kind of weird libertarian fantasy"

It's called the world we live in.

If a company's revenues are in decline, if there have been recent layoffs, well then the writing is on the wall.

A company folding should not come as a surprise to any of the employees unless the are utterly in the dark with respect to product development, revenues etc.

It's not a 'libertarian fantasy' to expect that employees etc. will have some idea of these numbers.

There's not much that can be done about solving the 'insolvency severance' deal. Severance beyond legal requirements is a bonus opportunity, and like all bonuses, it's subject to risk.

[pavlov]

A privately held 100-person game studio doesn't share its evolving revenue numbers with creative staff. Why would the business owners do that, really?

Most private companies are strictly compartmentalized and keep production employees in the dark about the business side. Some startups do the "anyone can peek at our sales numbers and cash flows internally" thing, but that's definitely an exception even in the startup world.

[toomuchtodo]

Better it be required by law and provided by the government than you hoping you'll get severance and being beholden to a company's "generosity", and the company include the additional tax payments as cost of doing business (same as the other employment taxes they're required to pay).

[sonnyblarney]

The issue is severance during company bankruptcy.

Nobody ever expects companies to be 'generous' that's not a thing - the issues are in contracts like anything else.

[toomuchtodo]

Severance is never guaranteed though, bankruptcy or otherwise. If a company is going bankrupt, of course they're not going to have the funds to pay severance when closing up shop. Unless I'm misunderstanding the point (and the quotations around generosity were intended to convey that in bankruptcy, that doesn't exist).

Regardless, I suppose the end result should be to make unemployment kick in faster so you don't need an insolvent company to provide a severance they don't have the funds to provide.

[sonnyblarney]

Severance can be put in a contract like anything else, so it's as 'guaranteed' as any other obligation so long as the company can pay for it.

[toomuchtodo]

If severance is in your contract, and the company is insolvent, you are SOL. It is not like any other obligation, as an example, unemployment: your company pays into unemployment funds every month (mandated by government), which is what allows you to collect if you're let go, regardless of their solvency situation.

A severance agreement with a bankrupt company is worthless.

[sonnyblarney]

Yes, severance is like every other obligation, different only probably in seniority.

Obviously if the company is bankrupt they cannot pay.

Don't work for companies that are going, or could be going bankrupt. In the vast majority of the cases the writing is on the wall long before that happens.

Payroll taxes are just another form of income tax, the company doesn't really pay it, the employee does, economically speaking that money would go to the employee were those payroll taxes not to exist. The the co. does pay it is just an accounting issue.