early retirement incentives

Tracie

Does anyone have samples of an early retirement incentive offer that I could review? I need language and an idea of what kind of early incentives one might offer. We are a small manufacturing company in the Midwest and this is the first reduction in force the company has ever had to contemplate. We are looking at offering an early buyout and reduction in force for the rest if we do not get enough employees to take the early retirement offer. Do you have to offer it to everyone say all those 55 and older? Or can you pick and choose out of that group as there are some that we would not want to lose and some that we would be more than happy to motivate them to go early. I need some guidance fairly quickly as we are meeting again this morning and the answers would be helpful.

WT

There are a number of issues you must keep in mind. First, the ADEA requires specific language and treatment for any incentive to keep you from being sued over age discrimination. You must give time to consider to employees, disclose how the classes of employees are being treated, give something of value, and give time for an employee to change their mind. Your attorney should be able to find this for you.

Second, what are your retirement benefits. It is important to know what people have before it is apparent what they might want. Incentives typically involve such things as lump sum payments, continuation of salary, enhanced retirement benefits, continuation of health care coverage, or subsidy of health care benefits through retirement years. Remember, to get out of ADEA problems, something of value must be offered to the potential retiree above and beyond what he or she would have otherwise received.

Third, have a plan. Decide how much can be spent. Target your numbers by deciding how much staff needs to be cut. Do not get into the trap of offering an incentive and having too many people sign up. Then you must either say no, or let them go and take their valuable experience with them and afterwards start the process of recruiting new help. Aside from this, you are far better off under ADEA to not replace those who retired under the incentive.

Fourth, have deadlines. Make sure the offer is not open ended. Satisfy your ADEA requirements but have a firm date by which people must decide. As part of this, decide about those who have already retired. Will they be included or not (they will ask). If you go back for retirees as well, set a firm date as to how far back you will go. If not, make that clear as well.

Good luck.

awilliams

We have an excellent Special Report on this very issue, entitled How to Manage Your Aging Workforce. If you are an Employment Law Letter subscriber you can access it on this site for free. If not, you can follow a link to purchase it. It sounds like it would be of great help to you.


Anne Williams
Author: How to Manage Your Aging Workforce