MEMORANDUM To: Dr. John J. Morris, Department of Accounting From: Group #1 (Matt Meenen, Bailey Ochs, Allison Olive, Marit Pavek) Date: 04/03/2014 Subject: Case 08-6, The Rump Organization Statement of Relevant Facts: The Rump Organization, a SEC registrant, is planning a corporate restructuring plan. On December 27, 2005 Ronald Rump, the CEO of the organization, along with the Board of Directors approved a plan to involuntarily terminate 100 of the organization’s employees. There is an option for each of the employees to sign a litigation waiver, which forfeits any right they have for legal action against Rump. In exchange for their voluntary signing of the waiver, Rump will offer each employee a lump-sum cash payment …show more content…
Alternatively, if the employee’s termination is considered voluntary a liability will be recorded when the employee leaves the company (ASC 712-10-25-1). In order to answer this question we need to establish the communication date in the case. After establishing the communication date we need to determine if all criteria presented in ASC 420-10-25-4 are satisfied. An additional issue is if the past one-time severance benefit offered to employees being terminated could be considered an enhancement to an ongoing benefit arrangement. If it is considered an enhancement, the liability would be recognized when it is probable that a future settlement will be reached (ASC 420-10-55-18). Conclusions and Authoritative Reasoning: Below is a summary of our conclusions and authoritative reasoning for each of the provisions: 1. We conclude that Rump should recognize the liability for the expected employee termination benefits on the communication date, upon meeting all four criteria presented in ASC 420-10-25-4 and communicated to the employees, which is December 31, 2005. We believe that the termination of the employees is involuntary. We also concluded that the benefit arrangement is not to be treated as an enhancement to an ongoing benefit arrangement. a. Following is a discussion of the four criteria presented in ASC 420-10-25-4: i. “Management, having the authority to approve the action,
6b. With respect to the author’s conclusions (either specified or implied), I reject or do not agree with the following and why:
However, the ruling in this case and others like it prove that employers can, in fact, be bound by articles written in an employee handbook when disciplining or discharging an employee. An abysmally written handbook can greatly jeopardize an employer’s right to terminate at will. Trends show that courts are increasingly acknowledging enforceable promises in the past employment practices of firms, in employer handbooks and in oral commitments. In addition to including an at-will disclaimer in employee handbooks, employers should also require employees to sign an acknowledgment confirming that they understand and agree to employment-at-will and that at-will employment can at any time be modified by a written agreement. Personnel manuals should explicitly state that the employer reserves the right to terminate employment at will. All written policies should also be free of any language that could be considered as a guarantee of job security. To be sure that these common pitfalls are avoided employers must retain the service of a labor attorney to draft and air-tight employee manual and acknowledgment
As you go through each provision you will find all of these provisions apply in some form during
ASC 42-10-25-8 states that entity should recognize obligation related to the termination of employees, the liability for termination benefits should be recognized at the communication date. According to ASC 42-10-30-4 through 30-6 this liability shall be measured at its fair value. In this case, Pharam Co. will not show the liability of $3 million for the termination benefits on its December 31, 2010 Balance Sheet.
The company has the right to terminate an employee as long as the termination does not discriminate or
12. What was the effect of the lifting of the requirement mentioned in question 11?
The company can opt for litigation in this charge by former employee alleging constructive discharge.
The rules are broken down into eleven articles; for now we will explore article VII – with the opinions and expert testimonies. When comparing the
Whether or not each element is perfectly met in each part of the exemption can be open to discussion. More
Bell Microproducts, Inc. mailed to McGurn an offer of employment that stated that if McGurn were terminated without cause during the first 12 months of employment, he would receive a severance package of $120,000. McGurn crossed out 12 and replaced it with 24, and signed the contract. Bell did not acknowledge the change that had been made to the contract and hired the applicant. McGurn was terminated without cause 13 months later.
Section Two: Present the position that you most agree with. Then, give ample evidence to
Preview of Main Points: in order to back up my argument, I’ve come up with three points to discuss:
6) corresponds within the purview of an implied contract. To alleviate the organization’s liability against a wrongful termination lawsuit based on the implied contract exception, the organization needs an unambiguous disclaimer stating that those documents do not create contractual rights for Phil and Terry.
In relation to labor laws, the case explains the required conduct between the employer and the employee during work termination. The employer is required by law to provide the employee with a letter or notice of termination before the actual date. Keating (p. 258) states that the labor laws require the employer to pay the employee the employment benefits based on the number of years of service and the kind of work. In many cases benefits are awarded to employees under both casual and permanent basis. The employer should ensure that the employers are awarded their rightful amounts since it is much left at the discretion of the employer. Therefore, McKee was entitled to a notice of termination and service or employment benefits.
WHEREAS, the Parties have concluded that this Agreement is a fair, reasonable and adequate resolution of all Claims that have been made, or could have been made in the Suit; and