Articles on Severance Pay
How Much Severance Pay Can You Expect?
Many laid-off employees are being offered more generous benefits than in the past. Plus, how to win back a boss who fired you, and how long is too long to consider a job offer.
I just found out that my job, along with those of several other people in my department, is being eliminated soon. This is really discouraging, since it will be my second layoff in four years. (I lost my last job at the end of 2001.) Also, I just turned 50 and I think job hunting will be tough this time around. Do you have any sense of how much severance pay would be reasonable to expect? So far, the HR people have told us nothing specific, but is it usually still based on years of service, or what?
Yes, companies' standard severance policies are still based largely on years of service, with about half of employers offering two weeks' salary for each year you've worked there. Slightly more than one in three pay one week's salary per year of service; and fewer than 20% offer less than a year's pay per year of service. Outplacement giant Lee Hecht Harrison (http://www.lhh.com) recently polled human-resources folks at 1,030 U.S. companies and found that, overall, severance pay has held fairly steady since 2001 -- coincidentally, the last time the firm did this survey and the last year you had to worry about this. "Despite the recession in the intervening four years, most organizations didn't cut these benefits significantly," says Bernadette Kenny, a Lee Hecht Harrison executive vice president. "Regardless of economic circumstances, employers seem to recognize the importance of having severance benefits that are competitive -- not only to provide sufficient resources for those in transition, but also to preserve their good standing with remaining and potential employees."
So, for example, the survey found that only 33% of companies made any changes at all in their severance policies during the economic slowdown -- and, of those, 52% actually became more generous. One interesting change: 49% now offer severance benefits to part-time employees, up from 39% who did so in 2001. A tiny 2% of companies say that temporary or contract workers are eligible to get severance, but that's still double the 1% of companies that said so in 2001.
But now let's talk about your situation specifically. Your age is significant here, because federal law provides particular protections for employees over 40 who lose their jobs. For one thing, you're legally entitled to take 21 days to think over a severance offer before you sign a severance agreement -- and even after you sign, the law gives you seven days to change your mind. So don't be rushed into anything. There are usually several components to a severance package besides cash, and some of them may be more negotiable than you think. For a few ideas you may find helpful, take a look at a column that appeared in this space in May, "How to Get a Better Severance Package". Best of luck.
Article by By Anne Fisher, FORTUNE senior writer from http://money.cnn.com/2005/10/18/news/economy/annie/fortune_annie101805/index.htm