Laying off employees is never an easy process, particularly when you're laying off workers who have been with you for some time. However, when times get tough in business, layoffs are sometimes a necessary step. You can ease the transition for your employees by offering a solid layoff package to get them through the initial period of shock and emotional turmoil. This package is aimed at helping stave off financial problems long enough for the employee to seek other means of income.
Offer at least a few weeks of pay at the employee’s regular rate. Some companies offer a week to two weeks for each year of service, which provides a deeper buffer for long-time employees. At the minimum, offer between two and three weeks of pay to give the employee a chance to get assistance from the Federal-State Unemployment Compensation program.
Provide health insurance benefits for the same amount of time you are providing severance pay. However, before you make an official offer to do so, check with your insurance company to determine the policy for doing this. The loss of benefits is one of the more jarring components of job loss for many people, as they are left without coverage and access to it for the foreseeable future. At the very least, you are required by federal law to offer a Consolidated Omnibus Budget Reconciliation (COBRA) package, which allows the employee to keep coverage as it is for up to 18 months at a considerably higher premium.
Include job placement services in the layoff package, such as making your human resources department available for resume help and mock interviews. You can provide personal references for your newly severed employees to pass on to potential employers. Additional ideas include allowing use of certain company resources (such as printing, copying and mailing) for a predetermined length of time and referring employees to an outside placement agency. Providing these services not only maintains a positive reputation for your company, but it offers a sincere effort to assist your laid off employees during their times of displacement.
Ensure that the employee’s retirement plan information, as well as any pension information and stock portfolios, are included in the package. Policies on how to handle this vary between companies; therefore, you must include specific language in the termination agreement. Include stipulations on what financial benefits will still be available to the employee, how to retain and/or liquidate stock options and 401K plans, re-payment options on any 401K loans, the portion of retirement/pension that will still be available and any other pertinent financial benefit information.