During an interactive session at an industrial relations workshop, when the question of severance pay came up, a young entrepreneur asked if she was paying fair wages to an employee, then why did she have to plan for the significant "contingent liability" of severance pay for the future? The answer is, of course, because the law says you must.
And the next question inevitably was: "But why? If I have paid a fair wage, paid for the value of the work that was done, week by week, month by month, when the market changes, as it inevitably does, and I no longer need the worker, why do I have to pay the worker all over again? It is not fair!"
Firstly, we have to disabuse people of the belief that "life is supposed to be fair." The Severance Pay Act was legislated so that people, who, having trained for and worked in one job to support themselves and a family, lose that job for whatever reason, will be given a chance to survive while they look for another means of support.
One of the objectives of a socialist philosophy is to ensure that all people in a society can survive decently whether they have a job or not.
That is why there are public hospitals, schools, transportation, security services, lighting, law enforcement, fire services, road maintenance etc.
When we don’t get them to the standard we think we should be getting, we complain loudly and righteously. We must recognise how fortunate we are. But someone has to pay for them.
If we can’t do it ourselves, as individuals, we have to draw from our fellow citizens, so that the culture and community can survive.
We do that by contributing, each of us, our share in little bits. By paying taxes. Because very few of us can afford to maintain roads by ourselves or put out big fires, supply ourselves with water in the dry season or ensure that trash and sewage is removed, doctors are on standby in case we get hit and public health is maintained.
We each contribute according to our ability to make sure each of us can be supported equally according to our needs. Not our wants, but what we need to survive.
Well, that is the theory, anyway. The operative words are equal. And if you are lucky enough to live in a society that accepts that, laws get passed to ensure that that will happen.
One of those laws is the Severance Pay Act. It exists so that when a worker, through no fault of their own, loses one source of income, they will have enough income to survive until they can find another. It is not a guarantee, it is an opportunity.
Severance is paid by the employer for a limited period of time only after someone, who has worked for over a year and only if their old job is genuinely surplus to the employer’s needs.
The legislation that makes the payment mandatory also limits it and the wording is interestingly ambiguous.
It doesn’t specify what "surplus" means, but it does say it means the termination must be on the grounds of "redundancy" and that means "surplus for whatever cause."
It could mean that the employee was hired for a preordained length o
