Early Retirement

System

We have an employee who is not performing in Texas. Can we offer an early retirement package? The employee is over 50 under 60. If the employee refuses package may we fire the employee? Is there a specific law (age discrimination)that applies? What would be the best way to let employee know that if he/she doesn't accept package they are terminated?

Gar

Why reward an employee who isn't cutting it by giving him an early retirement package? Folks who do this never cease to amaze me. If performance is lacking, document, give the employee a specific period to clean up his act and terminate employment if he doesn't pass muster. To give the employee a package isn't fair to your employer and it certainly isn't fair to employees who do perform. What's more, a package will send the wrong message to employees who know that this guy isn't cutting it. So, bite the bullet and do the right thing. Sit down with this guy, advise him of his short comings, give him a specific period to meet performance expectations, document and can him if he doesn't clean up his act.

Down_the_Middle

I'm unclear why a "poor performer" s/b incented to retire early (presumably with enhanced benefits, bridges, etc...) If performance is the issue, why not deal with it? Has the employee been informed of the problem areas and been given clear instructions about desired outcomes? If not, then that makes more sense to begin at that level. If that's already been done, it seems to me the individual should be in process of exiting the org...... He or she can be incented to leave w/o enhancing the retirement plan.........

It's unclear how large your org is and whether you have a DC or DB type of pension plan, but building a retirement incentive for 1 person is seldom practical or economical. If you revise your plan to allow this to happen, it must be offered to all other staff who meet those minimum requirements.... Your multiple questions do not easily fit a yes or no response as there are many other issues that s/b considered. I think the performance piece s/b addressed first........

System

I agree..but our organization does little to document poor performance. We now realize that this must change and are taking appropriate steps...but in the meantime we are having a problem letting people go because we have not taken the proper steps in documentation. What are the main differences between a severence package and a retirement package?

Down_the_Middle

Bottom line's the same altho different routes to get there.......
Essentially, the retirement route normally requires amending your plan to provide a financial incentive for someone to leave early. This is frequently down as a downsizing method when many people are involved.

The severance method simply says we're inviting you to leave with this financial payment. This is usually done for position eliminations and provides an income safety net for a quick departure. Normally the employee then signs a settlement waiver agreeing to not pursue litigation for any/all protected class categories. Unless you're prepared to terminate however, offering this can be risky if the person declines the offer and wants to remain. You'll then be forced to terminate and then risk being sued for poor/no documentation. This is exactly why offering severance to poor performers is so goofy.

A brief chat with a local labor attorney may help you sort out the pro's N con's and help you focus on the preferred method. If you're willing to spend mega bucks for this person to leave, then the easiest method is to provide a separation package that pays him/her to leave. I view this as a misuse of $ resources, but some companies go to extremes to de-employ people.

Theresa Gegen TX

Age discrimination law and the Older Worker's Benefit Protection Act (which requires specific language and waiting times for a valid release) will definately apply in this case. This situation must be handled with care. I recommend you hire an attorney to help you through your options.

Theresa Gegen
Attorney Editor -- Texas Employment Law Letter
Andrews & Kurth, LLP

System

Thank you..i appreciate the input..