Business Transactions

Important Notes When Creating a Severance Package

On the topic of worker benefits, employers are understandably more interested in discussing the advantages of working for their company rather than the benefits provided when employment ends. However, a well-designed severance package can produce long-term gains for businesses in terms of retaining employees, boosting worker morale, and enhancing the company brand even through difficult economic times.  The following are some actions that will help ensure you a successful severance package to fulfill your needs and provide equitable treatment for your workers.

1. Plan as Far in Advance as You Can

Avoid waiting until layoffs are about to happen.  Proactive planning will give you more time to make sure your severance policies line up with overall company goals; enlist legal guidance; and convey your policy so that workers know what to anticipate if layoffs occur.

2. Assess the Benefits of Your Present Severance Package

Consider what your current package offers.  According to a recent survey, only about half of employers have formal severance policies. In general, companies stress employee morale and invest a great deal of time and energy in ensuring that worker spirits remain high. To aid in this effort, starting or enhancing a severance package will convey an upbeat message to the workforce and thus improve morale.

3. Identify Your Company’s Goals in Having a Severance Policy

What factors are important to your company regarding a severance package?  Do they involve employee welfare; worker retention for possible rehire; having an appealing package to attract top-notch talent; or limiting your liability?  Severance packages come in many forms, and your company’s policy should be in line with your expected returns.

4. Construct an Official Severance Package Document

Generate a formal severance policy agreement that aligns with your company’s goals.  Severance packages can vary for individual employees based on seniority, job description, or management rank, but it’s essential to plainly convey the specific requirements for each type of package and guarantee they can be easily understood.

5. Be Consistent in Applying Your Policy’s Conditions

After the policy is created, avoid deviating from its conditions.  Workers talk to others who are either leaving the company or staying on, and opinions about unfairness can detract from the policy’s positive impact, possibly even leading to litigation.

6. Clearly Convey Your Severance Package to Employees

Avoid keeping your severance package hidden away in a file cabinet or in an obscure company computer folder; instead, publicize and promote it. Include it in materials for new hires and make it accessible on your intranet system.  You may even advertise your severance policy as a benefit or a form of compensation that reflects the company’s appreciation for service and its readiness to support workers transitioning to other jobs.

If you’re interested in developing a new severance package or in enhancing your current version, get in touch with us at Bell & Shaw Law, LLC today for a free consultation. Our knowledgeable business attorneys can assist you in creating a severance package that addresses the needs of both you and your workers.

Bell & Shah

Recent Posts

Tips for a Successful Closing

With the Winter season coming quickly here in Chicagoland, you may be feeling the pressure…

6 days ago

Working with an Attorney to Sell Your Home

If you are putting your home on the market, or if you are considering selling…

2 weeks ago

How to Choose Your Durable Power of Attorney Agent

Completing advance directives is a responsible part of building your estate plan. Not only do…

2 weeks ago

Avoiding mistakes when setting up partnerships

As established contractual relationships, Illinois partnerships can be difficult to untangle when things go wrong.…

4 weeks ago

Licenses vs Certificates: What’s the Difference?

Have you ever wondered what the difference is between a license and a certificate? Some…

1 month ago

Steps Associated with Real Estate Closing

Anyone who has considered buying or selling real estate has likely heard the term “closing.”…

1 month ago