Severance Pay

SMH

Hi! We are looking for feedback regarding a reduction in workforce and severance pay. Are there any manufacturers (or other employers) in the 75 - 200 employee range who would be willing to share their severance policy? Thanks in advance!

Leslie

My company is bigger (850) and a casino but this applies to our smaller entities also:

E. Severance Pay
1. Any employee terminated for reasons of reduction in force or employment at-will not related to criminal or seriously offensive off-property activities may be eligible for severance pay.
2. Calculated at two weeks pay for every year worked plus a calculated percentage of the two weeks pay for each full month of service beyond the last full year.
3. This money is subject to all applicable federal and state deductions and withholdings.
4. Severance pay does not apply in cases of retirement, wilful misconduct or disobedience or wilful neglect of duty.

Alex2003

One of my former employers used this approach (and it seems like for some companies it is a "standard") for salaried (exempt and n-exempt) employees:
- One week of pay for each year of service up to a max of 24 weeks
- Additional one half of weekly pay for signing a severance agreement for a max of 8 weeks
- Depending on the years of service - COBRA coverage paid by employer for a few months (up to 6, per service credit)
- Employees had several weeks to review the agreement, sign it, notarize it and return to HR. One of the articles recommended to review the agreement with the employee's attorney.

We did not pay severance for hourly employees, they went on unemployment.

NaeNae55

You might also want to consider how you pay out your severance. For instance, do they get it all with their last paycheck? Is it paid out over time as if they were still working?

Make sure the severence is dependent upon the employee working through to the last day you specify. You don't want to have someone leave a bit early and still expect the money.

On a side note, 2-1/2 years ago we had a RIF. We worked hard at making sure all the employees had a job and so had very little severence payouts. Several employees transferred over to our owner company. They were able to keep their seniority as far as benefits, etc. went. One of the employees worked through to the last day we had originally requested and started the very next work day at the owner company. Because we were not specific enough in our agreement, we had to pay severence to the employee. It really stuck in my craw as the timing was just lucky and not the employee's choice. It didn't seem fair to pay this one and not others, nor to pay this one severence when they didn't really lose their job. Something else that annoyed me was the fact that we had paid lawyers to look over the agreements and they had been no help at all.

Thanks for letting me vent. Good luck!