Monday, July 16, 2007

What Employers Should Know About Severance Package

Severance package is a package granted to employees after being laid off from work. This may also be given if an employee is terminated for authorized causes or even when the employee resigns depending on the arrangements.

However, if you are an employer you should know that there is no law forcing you to provide severance package. You can only be forced to do so under the following circumstances:
1. If you signed a contract granting severance package;
2. If severance package is regularly given to employees of a certain rank or position;
3. If you verbally agreed to provide severance package; or
4. If is mentioned in the employee’s handbook even without a contract.

Under the above cases, you may be sued for damages if you fail to provide your employees with the severance package.

If you want to grant your employees severance package, the usual amount is based on the employee’s monthly salary. Others include bonuses in the salaries as part of the computation of the severance package. There is no law providing for basis of severance package.

Just remember that you cannot be forced to enter into negotiations on the subject of severance package. Other employees may want to include severance package as part of the employment package. It is up to you if you want to include severance package as part of the deal. In the end it’s how much you want the said employee that counts. If you think that he could really be an asset to you then go ahead negotiate.

If you need help with understanding more about severance package and its consequences, consult your expert employment lawyers about it.