If you are an employer who is thinking of terminating an employee, you may be wondering how much you will have to spend on their severance package, if they are entitled to one. Here are some steps on how to figure the amount, including using a severance calculator.
1. Determine If It Is Required
Severance is not always required when letting an employee go. It is in no way a legal requirement. However, many employers choose to include it in a contract or at the end of employment for loyal employees who suddenly find themselves without a job for whatever reason.
2. Waivers and Releases
Make sure to include a waiver and release that will need to be signed before any severance package can be issued. This protects the employer in the event that an unhappy employee tries to sue for wrongful termination. By signing these forms and accepting the severance package, the employee is waiving their right to any future legal recourse.
3. Determine What Is In The Severance Package
A severance package can be much more than just a set amount of money that is given to the employee. It can also include such things as health benefits for a pre-determined length of time, ownership of electronic devices that were used during the course of the job, letters of recommendation, and moving expenses. A severance calculator can be of great assistance in determining the cash value of these severance package benefits.
4. Review the Contract
When it is time for the company and the employee to part ways, the contract containing the severance package details should be thoroughly reviewed. Typically, an employee receives two weeks of salary for every year that they have been employed. Of course, this is just a typical situation, the severance can be calculated any way the employer desires. For more information, you may find the resources at Levitt LLP to be useful.
5. Be Prepared For Negotiation
If you are an employer who does not offer a severance package on a typical basis, be prepared for employees to try and negotiate a severance package for themselves. This should not be a turn off for the employer, even if one is not granted, it shows that the employee has initiative and drive.
By following these tips, there should be no issues when it comes time to calculate a severance package. By knowing what to expect, the transition should be smooth and painless.