00:00

the covid pandemic has left many

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employers with more leaving employees

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than they'd like

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from mass layoffs and early 2020 to the

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great resignation of 2021 and hr pros

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know that workers leaving an

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organization means more than just saying

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goodbye

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severance packages for example need to

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be handled with care consider how poorly

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better.com handled recent layoffs

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in december better ceo fired over 900

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employees in a zoom meeting

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without any notice and it was effective

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immediately

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the online mortgage lender originally

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offered only 30 days severance which was

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soon doubled when layoff workers

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threatened a lawsuit under the federal

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warn act

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an issue we'll cover more in a moment

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that approach was bad enough but to make

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matters worse better.com included a

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trophy a certificate and a company

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t-shirt as if it was a consolation prize

01:00

in today's episode i'm going to cover

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how small businesses should handle

01:04

severance including when and how it

01:06

should be offered by the end you'll have

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a better understanding of whether your

01:11

organization should offer severance

01:12

packages and how to do it right

01:15

today we'll discuss

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what is a severance package

01:19

when should a severance package be

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offered

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and how to handle a severance package

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before we continue i do want to note

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that this video is for informational

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purposes only i strongly recommend that

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organizations considering a severance

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policy or package consult federal and

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state laws as well as a labor and

01:38

employment attorney now let's get into

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01:43

what is a severance package

01:47

a severance package sometimes referred

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to as just severance is usually a lump

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sum payment plus any benefits an

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employee receives when they leave an

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organization

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severance can include one to two weeks

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worth of wages for each year of service

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cobra coverage and outplacement employee

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services such as career counseling

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resume writing help or letters of

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recommendation

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usually a worker's final paycheck is not

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considered part of a severance package

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to be clear a company t-shirt is also

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not common or advisable

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in some cases employers pay severance to

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workers who are laid off in order to

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help them search for their next

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opportunity

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in other cases however employers offer

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severance pay to honor an employment

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agreement

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this begs the question is severance pay

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legally required

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the fair labor and standards act does

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not require employers to offer severance

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pay when an employee leaves their

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organization however

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if a severance package was included in

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an employment or collective bargaining

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agreement that contract is legally

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enforceable

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there are also a few other circumstances

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where severance pay may be legally

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binding

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for example

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some states require severance pay for

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factory workers who are laid off when a

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plant closes or in cases when an

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employer lays off a significant

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percentage of its workforce

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again you should consult your state laws

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and a labor attorney

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federally in specific situations a

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severance package may be offered in lieu

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of the 60-day notice of a factory

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closing or mass layoffs required by the

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workers adjustment and retraining

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notification act also known as warn

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a warrant notice is required whenever an

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organization with a hundred or more

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full-time employees lays off at least 50

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workers at a single site a link to

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official warn information in the

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description

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still even without a legal requirement

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many employers choose to offer severance

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to employees who are involuntarily

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terminated the society for human

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resource management or sherm notes that

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employers typically want to soften the

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blow of an involuntary termination and

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to avoid future lawsuits by having the

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employee sign a release in exchange for

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the severance for more information check

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out a recent episode of hr faq where i

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cover the legal requirements of

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severance pay in more detail i'll link

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to it in the description

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there's one more issue i'd like to

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address before we move on

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namely employers may also be required to

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offer severance if it has been stated in

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official company materials such as a

04:30

culture guide as a side note a culture

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guide is a company document that goes

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beyond the whats and hows of the typical

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employee handbook and digs into the wise

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as well

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i'll be covering how to create one in

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next week's episode

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for transparency sake many larger

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employers have a written severance

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policy but small to mid-sized businesses

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usually handle severance on a

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case-to-case basis

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in fact i would go so far as to

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recommend that smaller employers not

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have a written policy in order to have

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the flexibility to deal with severance

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as needed for such particular situations

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so when should small to mid-sized

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businesses consider offering severance

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when should a severance package be

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offered

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since severance is not required by

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federal law in most circumstances

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employers may use their discretion about

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when to offer it and what to include in

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a separation agreement to be clear even

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if you don't have a written severance

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policy you should have the terms of a

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particular separation agreement

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documented in writing

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again i recommend you consult a labor

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attorney

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speaking of which you should consider a

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severance package anytime you have

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concerns about potential litigation

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following an involuntary termination

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severance can not only soften the blow

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but a separation agreement can also

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protect you from further legal action

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another situation in which to consider

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severance is whenever a manager with

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many years of service leaves an

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organization

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a severance package acknowledges their

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loyalty to the company and can help them

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during the search for their next

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management position which usually takes

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longer to find

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again not having a written policy gives

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you flexibility in a situation that is

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already difficult to navigate

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while employers have discretion to offer

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severance whenever they wish i would not

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offer it when an employee needs to be

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terminated for poor performance or for

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egregious misconduct still

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in each of those situations their

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behavior should be thoroughly documented

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to protect the organization

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this brings me to my last point i want

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to cover today

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how to handle a severance package

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hr and management should work together

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when it comes to separation and

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severance even before a particular

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situation arises hr should think through

06:56

the worst case scenarios and prepare for

06:59

how to avoid them all together if

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possible

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this is good hr advice whenever you're

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dealing with termination compliance

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harassment or any other high-stakes

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workplace issue

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i always say after all that hr pro

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should be

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proactive first train managers on how to

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handle involuntary terminations this

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should be included in regularly

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scheduled dedicated days of manager

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training but it should also be addressed

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in a manager manual that can be used as

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a reference

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at burme portal our manager manual

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includes the appropriate language to use

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in discussions leading up to

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terminations as well as a wrap-up letter

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template that hr and managers can use to

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notify the employee and document all the

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details this is usually where we include

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a separation agreement

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