Roy’s Analysis of Quirky Question # 156, Resignation for Good Reason

Readers:  My apologies for the absence of Blog Posts during the last several weeks.  Shortly after we shifted to this terrific new Blog format, I started a trial.  For those of you who have been in trial (either as lawyers or clients), you likely know what an all-consuming experience it is.  Say good-bye to your family.  Say good-bye to other clients.  And, say good-bye to other activities you enjoy, which for me includes writing the Quirky Employment Questions Blog. 

The trial is in hiatus and my life is returning to normal.  Thus, I now have the opportunity to resume some of the Blogging activities.  Set forth below is my analysis of QQ # 156.  Tomorrow, I will post a new question and Wednesday I will post a question from my colleagues on the West Coast.  Thursday I will provide some clues to what I thought was a relatively easy Trivia Question.  And, on Friday, I also will have another article in my ongoing series on Leadership.  

Thanks for your patience during the last month.  Regards, Roy 

Quirky Question # 156

One of our key executives recently resigned. Under the terms of his contract, he had the right to resign for “good reason.” He claimed that due to certain financial restructuring our company underwent, his job was going to change significantly. Even if his supposition was correct, didn’t he have to wait until these events played out?

We checked his contract and the “good reason” provision is pretty employee friendly. The agreement states that his conclusion regarding “good reason” is entitled to deference from the company. Does that mean we have to accept any justification he advances?

As you likely suspect, if he resigns for good reason, he gets a substantial severance package. This too troubles us since he apparently resigned so he could accept a more highly compensated position with a friend of his at another company. This just isn’t passing the smell test for us. Do we have a reasonable chance of challenging him on these issues?

Roy’s Analysis

The short answer to your question is that you can challenge your former employee’s assertion that he resigned his employment for “good reason”. Whether your chances of success are “reasonable” is something I hope you will be able to assess more accurately after reading the analysis below.

As a prefatory comment, let’s provide some backdrop to this inquiry. First, as you note, your employee has a contract that contains the provision in question. From a big picture perspective, not too many employees have contracts. Fewer still have contracts that define the circumstances under which they have the right to resign their employment and still remain eligible for a substantial severance package. So, as you note, this contractual provision is for one of your “key executives”. This typically is the group that has these types of contractual provisions. Read more