THE REASONS behind an employee's lay off could be many. It could be due to various reasons - misbehaviour, poor performance, downsizing, relocation or even closure of the organisation.
Dismissals are unpleasant but unavoidable affairs. So, how about softening the blow with a severance package?
Often, employers are a confused lot unable to decide on the severance package to a departing employee.
However, it is not compulsory by law to award severance pay to those who leave an organisation of their own volition.
But, the general corporate view advocates a severance package to take the sting out of the dismissal. Nowadays, severance package has become part of the exit process in prominent organisations.
Besides, if any organisation intentionally or inadvertently makes employees expect a severance package, then it must follow the practice.
Backing out after making a promise or mentioning it in personnel policies, employee handbook or employment contract will shackle the employer in legal tangles. Also, if the organisation is wont to making severance payments, then it is obligatory on its part to continue the practice.
Severance pay helps the dismissed employees overcome the ensuing disappointment and frustration and comes handy during their transition to a new job. It also helps the employer portray a just and fair face to the other employees. It acts as an insurance against possible sabotage, espionage and, sometimes, retaliatory lawsuits from the laid-off workers.
Severance options
The amount of the severance package is not fixed, but should be consistent and reasonable. A rule of thumb would be to fix the amount in consonance with the tenure of employment and job position held by the departing employee. Here are a few aspects that can figure in the severance package:
1. Severance package usually contains two weeks' pay multiplied by the number of years of service with the organisation.
2. Employers can offer the continuity option in matters like health insurance benefits, life or disability coverage, etc. They can even make premium payments for a specified period.
3. Organisations can agree to give a good letter of reference with positive testimonials wherever possible.
4. Employers can have an outplacement programme with a customised job search. They can provide counselling on career goals, tips on résumé writing and how to emerge successful in interviews so that the laid off employees find new jobs. They can also provide leads for potential jobs, offer training programmes and help them during discussions with potential employers.
5. Organisations should free dismissed employees from any contractual obligations.
6. Employers should provide adequate unemployment compensation or let the employee retain cash advances or the laptop or mobile phone given to him.
A few strings attached
If a terminated employee nurses any grudge against the management, he may file a lawsuit. To avoid such controversies, the employer can ask the employee to sign a release document in exchange for the severance package.
This will prevent the employee from suing the organisation for discrimination or wrongful termination. To prevent such legal actions, companies should take legal experts' services for drafting release documents. The departing employee should be given a week or two to review and sign the document.
All said and done, a severance package is like a security blanket for an organisation. An ideal severance package should make the exit process as pleasant as possible for the employee.
Dismissals are unpleasant but unavoidable affairs. So, how about softening the blow with a severance package?
Often, employers are a confused lot unable to decide on the severance package to a departing employee.
However, it is not compulsory by law to award severance pay to those who leave an organisation of their own volition.
But, the general corporate view advocates a severance package to take the sting out of the dismissal. Nowadays, severance package has become part of the exit process in prominent organisations.
Besides, if any organisation intentionally or inadvertently makes employees expect a severance package, then it must follow the practice.
Backing out after making a promise or mentioning it in personnel policies, employee handbook or employment contract will shackle the employer in legal tangles. Also, if the organisation is wont to making severance payments, then it is obligatory on its part to continue the practice.
Severance pay helps the dismissed employees overcome the ensuing disappointment and frustration and comes handy during their transition to a new job. It also helps the employer portray a just and fair face to the other employees. It acts as an insurance against possible sabotage, espionage and, sometimes, retaliatory lawsuits from the laid-off workers.
Severance options
The amount of the severance package is not fixed, but should be consistent and reasonable. A rule of thumb would be to fix the amount in consonance with the tenure of employment and job position held by the departing employee. Here are a few aspects that can figure in the severance package:
1. Severance package usually contains two weeks' pay multiplied by the number of years of service with the organisation.
2. Employers can offer the continuity option in matters like health insurance benefits, life or disability coverage, etc. They can even make premium payments for a specified period.
3. Organisations can agree to give a good letter of reference with positive testimonials wherever possible.
4. Employers can have an outplacement programme with a customised job search. They can provide counselling on career goals, tips on résumé writing and how to emerge successful in interviews so that the laid off employees find new jobs. They can also provide leads for potential jobs, offer training programmes and help them during discussions with potential employers.
5. Organisations should free dismissed employees from any contractual obligations.
6. Employers should provide adequate unemployment compensation or let the employee retain cash advances or the laptop or mobile phone given to him.
A few strings attached
If a terminated employee nurses any grudge against the management, he may file a lawsuit. To avoid such controversies, the employer can ask the employee to sign a release document in exchange for the severance package.
This will prevent the employee from suing the organisation for discrimination or wrongful termination. To prevent such legal actions, companies should take legal experts' services for drafting release documents. The departing employee should be given a week or two to review and sign the document.
All said and done, a severance package is like a security blanket for an organisation. An ideal severance package should make the exit process as pleasant as possible for the employee.
PAYAL AGARWAL
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