Changes In Severance Pay In 2018
According to Society For Human Resource Management, it seems that severance pay policies are starting to become more flexible and changeable in 2018. Here’s more of what they found:
- Almost all U.S. businesses (97 percent) say they offer some form of severance to workers
- Only 55 percent had formal, written severance policies last year, a decline from 2011, when 65 percent had formal severance policies.
- 52 percent of businesses set minimum and maximum severance amounts, down from 70 percent in 2011
Lee Hecht Harrison and Compensation Resources Inc.’s findings were detailed in the firms' 2017-2018 Severance & Separation Benefits Benchmark Study report:
- 88 percent of companies pay severance when termination is due to a reduction in force or corporate restructuring
- only 13 percent do so when the termination is for cause and only 6 percent provide severance on retirement.
- In exchange for severance, employees at 92 percent of companies are required to sign a written release that ends any legal liability between the employer and the employee
- This was virtually unchanged from 2011 (93 percent).
- Nearly one-quarter (24 percent) of companies had such a severance process in place last year, up from 15 percent in 2011
- 58 percent of employers pay severance in a lump sum
- 35 percent use their normal payroll cycle.
- An additional 7 percent offer recipients severance on a normal payroll cycle but stop when they find new employment.