Say your employer told you that your employment is going to end, and you have the “choice” to resign rather than be fired. (Many employers do this in conjunction with presenting a severance agreement that has a “resignation notice” as an exhibit the employee can sign and submit). Understandably, if your employer puts you in this situation, you may view your impending decision in the terms the employer presented: “Should I resign or not?”
This is actually not the question you should decide. At least not at first. There are more important factors to consider before giving the employer an answer (or a signed resignation notice, etc.).
These other factors, and other questions, should first be considered:
- A documented “resignation” could possibly hurt your chance to receive unemployment benefits.
A given State’s unemployment office may consider a resignation to be basis to disqualify a worker from unemployment benefits eligibility. Although a given State may also ask questions to determine if a so-called “resignation” was involuntary and initiated by the employer. A given State may award unemployment benefits for various forced-resignation scenarios. The bottom line is this is something you could learn more about, with respect to your given State and situation, before make the “resignation” decision presented by the employer.
- Would the employer agree to not contest your unemployment benefits, and to (correctly) report to the unemployment office that the ending of your employment was involuntary (whether labeled a forced “resignation” or not)?
This relates to issues above. If an employer agrees, e.g. via a severance agreement, not to contest unemployment and to acknowledge the truth to unemployment authorities that the ending of employment was involuntary, then there may be less risk in agreeing to a forced “resignation”, depending on the State and it unemployment eligibility criteria involved. In my home State of Wisconsin, many such forced-resignation scenarios do qualify for unemployment benefits.
- If you are considering potential legal claims and/or severance negotiations, agreeing to a “resignation” could potentially hurt related legal rights or leverage.
Generally speaking, legal claims under employment law (e.g. a legal complaint alleging a job termination violated discrimination law) are tougher to win if a worker is alleged to have resigned rather than been discharged. Please note that every situation is different, and I have represented workers with forced “resignations” who had very successful litigation and severance outcomes. But documenting a resignation can present a very real risk factor for many workers who have potential legal rights that could be explored in severance negotiations and/or litigation.
- If you did not agree to call your job ending a “resignation”, would the employer disclose the fact you were involuntarily terminated to any new prospective employer(s) you applied to?
Many workers are rightfully concerned that a discharge looks bad on their “record”, and see a resignation as looking better when communicating to a new potential employer, etc. (Of course, having a “resignation” on one’s resume or job application could also conceivably raise an issue with a new employer, if it looks like the resignation occurred with a gap in service, or no new job to go to). One issue of note is that many former employers do not themselves disclose to prospective employers any information about how the former employee’s job ended, whether it was a discharge or resignation, etc. Many employers follow a “neutral reference” policy where they only disclose very limited and neutral job reference information, i.e. the worker’s dates of employment, job title and perhaps pay rate. If your former employer would follow such a neutral reference policy, that information could be helpful in deciding whether to agree to a forced “resignation” or not.
- Whether you decided to label your job-ending a “resignation” or not, how would you best explain the circumstances of your job ending to a new potential employer?
You should envision what you would say to a new potential employer under either scenario, and would of course need to speak truthfully about not only the agreed categorization (i.e. “resignation” vs. discharge), but also speak truthfully about factual circumstances. If you agree with your former employer to take the “resignation” option and to categorize your end of employment as such, you will still probably need to explain related factual circumstances with a new potential employer– which will likely want to know what happened and ask questions accordingly. You would also need an explanation for a new employer if you did not agree to the forced “resignation” option. Before making a decision as to “resignation”, you should visualize each potential scenario and each associated communication with a new prospective employer that would occur.
Before answering an employer’s request to categorize their ending of your employment as a discharge versus forced “resignation” option, you should consider the issues above, as well as any other related issues of importance to you. There is no best-answer that applies universally for all workers in this situation, but considering the issues above– before making your decision– will likely help you arrive at the best decision for you.