Severance Pay

KathyA · December 2003

I'm taking a basic survey to see what type of severance pay you have offered to terminated employees (i.e., due to a RIF for example)?

If applicable, how large is your organization and what type of organization is it (i.e., non-profit, manufacturing, etc.).

Thank you VERY MUCH!

San Francisco · December 2003

Kathy, we have had different agreements, but the average is a weeks pay for each year of service with a minimum of 2 weeks pay. We have many long term employees, so it is usually capped at 15 weeks. We also pay Cobra for 3 months and offer outplacement services for 3 months. We are retail with 20,000 employees.

Elizabeth

Pork · December 2003

Elizabeth: Ours is similiar with the exception that as a Self-Insured Medical Plan, when COBRA is offered as a severance package you could be hurting the ee's who remain. You should look at other options and let the severenced x-ee handle the medical issues around a departure. Give them the money associated with the COBRA premium payment and move on. 95% of the time the ee will not take the COBRA and spend the money elsewhere and should a catastrophic situation occur the individual's medical bills may not have to be borne by your plan. Hopefully, the x-ee will have purchased his/her own medical coverage with the money! COBRA will be taken due to some medical need to remain covered and your plan could be responsible for many thousands of patient $ollars. When driven with medical expense in the thousands even a $1000.00 COBRA PREMIUM may be worth ever penny. Cut your postential losses by cutting this very costly expense. WE NO LONGER OFFER ANYONE COBRA SEVERENCE PAYMENTS!

I KNOW YOUR CASH FLOW MIGHT LOOK OK FOR KEEPING A SEVERED PERSON ON YOUR MEDICAL PLAN GROUP COVERAGE, HOWEVER, WHEN FACED WITH A MOTOR CYCLE ACCIDENT WHICH COST THE X-EE THOUSANDS OF DOLLARS IN MEDICAL BILLS AFTER HE LEFT, BUT BEFORE HE HAD SENT IN HIS COBRA ELECTION, BUT WAS ABLE TO GET THE PREMIUM ELECTION POST MARKED WILL CAUSE YOUR COMPANY SEVERENCE PACKAGE TO SAY WHOA!!! STOP THE PRACTICE AND NOW AND DO SOMETHING DIFFERENT!

PORK

Yahoo · December 2003

Our package was very generous - a month of severance & COBRA coverage for each year of service w/ a minimum of 3 months, maximum of 12.

When we started the RIFs we had 3,000 employees & are in the financial industry.

Hope this helps!

Sue · December 2003

I consult with several smaller companies, less than 100 ees each. We sometimes offer severance packages but only with severance agreements. To meet the level of "due consideration" (in WI) the agreement must offer at least 4 weeks pay. Past that the formula is one weeks pay per year of employment.

If the company is under financial duress, we would cap it at a max of X weeks (say 10). We also extend insurance for several months.

Severances are typically only offered to exempt personnel, not non-exempt. We are non-union.

San Francisco · December 2003

>Severances are typically only offered to exempt
>personnel, not non-exempt. We are non-union.

I would agree except in situations where mass lay-offs occur. Last February, we laid off some 100 employees, mostly non-exempt, and offered all a severance package. Severance packages are always predicated upon signing a severance agreement.

Elizabeth

System · December 2003

I just finished a mass layoff (plant closing). All employees were offered "Enhanced Severance" which consists of the following (if I received their signed release):

Minimum 4 weeks pay

1 week severance pay per year of service through 14 years of service, plus 3 months of benefits continuation.

2 weeks pay per additional year of service and 6 months of benefits continuation.

Maximum payout of 52 weeks.

Outplacement consisting of a 2-day transition workshop for hourly and non-exempt salaried employees, 3 month program for exempt employees, and a 6-month program for plant staff.

Since some of our products were moved overseas, I was also able to work with the DOL for educational benefits through the Trade Adjustment Act.

My (current) employer is a $6 Billion company employing about 37,000 worldwide.

JM in ATL · December 2003

We've only offered severance to one employee and that was b/c she turned in a 3 month notice and we really didn't need her to stay.

So, we accepted immediately, paid out two weeks, remaining vacation and sent her on her way.

We have 45 ee's in 6 states and are in wholesale distribution.

Severance Pay

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