SJC Decides Early Termination Agreement Disqualifies Employee for Unemployment Benefit Eligibility

In essence, unemployment benefits are available to persons whose jobs are terminated by the employer other than for cause (such as theft, absenteeism, etc.). One might think that an early termination agreement qualifies one for unemployment benefits. As illustrated by Connolly v. Director of Div. of Unemployment Assistance, SJC-10821, decided by the SJC on June 16, 2011, however, this is not necessarily true.

The touchstone of eligibility for unemployment benefits is whether the departure from employment is voluntary or involuntary. If the departure is voluntary, the employee is not entitled to unemployment benefits.

Depending upon the particular circumstances, an early retirement agreement may be voluntary or involuntary. For example, where the employee is going to lose his job anyway if he doesn’t sign the agreement, the termination is involuntary. In that case, it makes sense for the employee to sign the agreement. In addition, it makes sense to state in writing that the termination is involuntary and that the employer will not challenge the employee in seeking unemployment benefits.

When the employee is not in jeopardy of losing his job, as was the case in Connolly, the early termination agreement is voluntary. Consequently, Ms. Connolly was not eligible for benefits. If you ever find yourself in a similar situation, you probably want to sign the agreement only if you are prepared to go without unemployment benefits until you locate your next position.

Daniel Keleher, Esq.

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