How many of you will agree if I say that a company with a bad reputation pays more per every employee hired? Infact, as per Harvard Business Review, an organization with a bad reputation pays $4,723 more per hire! Granting severance packages will uphold any company’s reputation. By doing this, your company is providing an employee benefit to departing employees in order to protect its brand reputation while still retaining its ability to recruit skilled individuals.
COVID-19’s economic impact is being felt across industries and regions, requiring businesses to make difficult cost-cutting decisions. Despite the fact that firms are experimenting with alternatives to layoffs, personnel reductions are and will continue to be an unavoidable reality for many.
As a result, companies must think about how they offer and create severance packages.
F-I-V-E Steps to Build a Perfect Severance Pay Plan
- Be Aware of Your Liabilities:
Before you start establishing your severance pay plan, it’s critical to be aware of all regulatory compliances. When drafting a severance pay plan, keep the administrative and state/territory legislation in mind. If necessary, seek legal advice.
- Assess the Eligibility and Coverage Possibilities:
On termination, not every employee is entitled to a severance plan. It is determined by state laws and the number of years they have worked for the company. Employers frequently offer severance pay to long-term employees. It’s a gesture of gratitude for all of their hard work and dedication throughout the years.
- Create a Severance Contract:
A severance contract is a legal document that spells out the terms and conditions. The goal is to avoid future lawsuits from departing employees and to provide a smooth transition. While creating a severance package, there are various factors to consider. The most prevalent is pay, which is provided by 95% of employers.
As of Today, 91% of these employers offer outplacement services and other benefits like Flexi benefits, outplacement services etc., which gives you an additional tax benefit.
- Finalize the Severance Pay Plan:
After evaluating all of the factors, you should have a better understanding of what to include in a severance package in order to call it a fair share. Here are some of the significant benefits you can provide in addition to the severance payment:
- Healthcare Benefits
- Flexi Benefits
- Job Placement Services
- Stock Acceleration
- Unused PTO reimbursement
- Communicate to the Employees:
Considering the pandemic situation, its high time companies showcase their severance pay plan to their employees. Companies can include it in new hire packages and make it available on the website. They can also present the severance packages as an employee benefit for employees.
Conclusion:
With the COVID-19 outbreak, several companies have started taking the route of formulating and building a severance plan. Although layoffs are an awful reality, companies can build offerings to make them more palatable, improve the morale of existing workers, and positively influence future candidate views.
