Chapin

This appeal by certain former salaried and hourly employees (Employees) of the Memory Products Department (Memory Products) of respondent, Fairchild Camera and Instrument Corporation (Fair-child), from an adverse judgment after a court trial, presents a question of first impression in this state as to the nature of severance and in lieu of notice benefits in a contract of employment. For the reasons set forth below, we have concluded that the trial court erred in concluding that Fairchild’s sale of Memory Products was not a termination of employment that would entitle the Employees to the benefits in issue.

The record reveals the following pertinent facts: Fairchild, the parent foreign corporation with several subsidiaries and 13 different divisions in 50 states, created Memory Products in November 1965, as a separate department to produce memory cores for small computers. Fairchild’s Semiconductor Division (Semiconductor), under contract, performed personnel and payroll functions, as Semiconductor did for all Fairchild west coast personnel. The Employees were thus subject to the corporate standard practice instructions (SPIs) issued by Fairchild’s home office and the…