01 May 11 Meaningful Components of a Severance Package
It is never easy to lay off a good employee, but recent events have caused many businesses to make these tough decisions. A way to better support their transition into unemployment is to create severance packages with meaningful additions. If you’re raking your brain for severance package ideas, take some advice from these 11 thought leaders.
Read on to learn about the severance package strategies they recommend.
Continuation of Healthcare Benefits
We’re in a healthcare crisis, and a continuation of healthcare benefits for former employees is a gesture that shows you care about well-being. These benefits can help a former employee make a difficult transition, while not having to worry about the one thing that everyone is concerned about: health.
A Letter of Recommendation
A Letter of Recommendation outlining the value of the employee and the services provided or a job done well. This will leave them with a sense of security and self-esteem to realize one door closing was an opportunity for another to open.
Severance Pay and Medical Insurance Benefits
As someone who was affected by the COVID-19 layoffs, it would have been beneficial to have at least one-week severance pay and one month of medical insurance benefits since it takes time to receive unemployment pay and new medical insurance.
Kayla Lynn, IT Recruiter
If the budget does not allow, work with your internal HR and Talent Acquisition departments to put together a small guide offering resume tips, interview prep, and other job search advice. Keep in mind, many may have not looked for a job since they started at your company. This is the least that can be included regardless if severance is provided to a laid-off employee.
Katie Gillespie, Senior Recruiter/Account Team Lead
Provide a Meaningful Exit Package
Given the current crisis, the continuation of benefits is critical for most employees. Employers that are able to extend health benefits as part of a severance package or furlough employees to allow for the continuation of health benefits will be providing a meaningful exit package.
Take It Case by Case
It really depends on the financial state of the company. Some things an employer can provide to soften the blow or sweeten a severance package is to pay out vacation days. If the employee was hitting goals, providing them their bonus, or even the ability to exercise stock options. Paid COBRA or health insurance assistance would also remove a lot of financial burdens. Payment for educational benefits if an employee is part way through a program. A stellar written reference letter, without being asked by the individual, is really thoughtful and costs nothing.
Vidya Betesh, Human Resources Generalist
Ban Together by Sharing Industry Contacts
Not exactly a severance package item but when I was recently furloughed, I wished I had exposure to everyone that was laid off with me. I had industry contacts and insight into companies that were hiring I felt would be helpful and there were individuals I wanted to connect with and leverage as well. When something as awful as a mass-layoff happens, the least we can do is ban together and support each other.
Maura Dern, Sr. Recruiter
Gift Cards for Necessity Items
Something many employers do not think about to be included in a severance package – and that can also be written off on their taxes as a business expense – is gift cards. I have heard of a few employers providing them and how gracious the employee and family were as it was not at all expected. Whether a Visa gift card or a grocery gift card, these items are not taxed prior to being given to the employee and will help offset the costs of groceries and necessity items. This is a time of uncertainty without a known end in sight, so any contribution to their now financial burdens and will make a significant impact.
Rachel Valentino, Recruiting & Staffing Manager
Provide Resources If in a Financial Rut
We are seeing employers who care very deeply about their employees have to lay them off due to the current health emergency. Employers who are short on cash simply do not have the ability to pay a cash severance or carry the load by paying an insurance premium for their terminating employees, but offering what you can is always meaningful: dinner once a week – delivered to your employee’s home; a grocery delivery; or access to purchase supplies and food at cost from the Company for the next several months. In addition, employers can offer a smooth process and access to employment information so that employees who are laid off can easily access unemployment and other benefits for which they might qualify.
Offer Partial Salary
Times are tough right now. Companies are not making money, the least companies can do is make sure employees can survive to live at least a month after the retrenchment by offering 1/2 salaries. It’s hard to go from a full salary to nothing the next month. Especially if there are lockdowns in place that make it hard to find new work.
Eugene Madondo, Seo & Content Manager
10 Weeks Severance Pay
Although there are no requirements in the Fair Labor Standards Act (FLSA) for severance pay, I believe offering at least 10 weeks of severance pay is a good practice. Although, in times like these that may not always be possible. I think if we as employers could offer one thing in moments like these for our former employees it should be a continuation of health insurance coverage for as long as we can.