Severance is a process that takes place in nearly every company today. It is a form of termination in which an employee is given notice of the termination of employment or is asked to voluntarily terminate employment. Severance may take place for a variety of scenarios and can be initiated by the employer or by the employee.
When severance takes place at the request of the employer, it is typically done when a company is facing financial difficulties or restructuring and can’t afford to keep its current workforce. In these cases, it is usually done in order to reduce a company’s payroll costs. It is important to note that some states have laws which require employers to provide severance pay to employees being involuntarily terminated.
When requested by the employee, severance can take place due to an employee’s decision to leave the company for another job, a family-related move, retirement, or other personal reasons. In some cases, an employee may be able to negotiate for a severance package with the employer. This often includes pay for a specific period of time, such as three months or less, severance pay and/or a continuation of benefits up to a certain point.
No matter what type of severance takes place, there are specific steps that need to be taken before the employee is actually severed from the company. It is important to note that this process can be complicated and is best done with the help of an experienced attorney or mediator. Here is what usually takes place:
1. The employer must issue a written notification to the employee that their employment is going to be terminated.
2. The employer must provide the employee with a copy of any severance terms and conditions and associated documents, such as any payment or continuation of benefits.
3. Both the employer and the employee should negotiate the details of any severance package, if applicable.
4. The employer should provide the employee with a clear statement of the amount of severance pay they are entitled to and the duration it will take place.
5. After the parties agree, they should sign and date the severance agreement.
6. The employee should receive the final severance payment.
The most important step in the process takes place in the meetings prior to the severance and during the negotiation for possible severance pay. This is when both parties have the opportunity to clearly discuss and understand the terms of the severance agreement and to make sure everything is in place. This also gives either party the opportunity to consult a lawyer before signing off on the agreement.
Severance can be complicated and can carry a significant emotional and financial burden for both parties. It is important for the employer to consider all ramifications before making a decision to sever an employee from the company and to consider any economic consequences that may follow. It is also important for the employee to understand their rights and to take the necessary steps to ensure a smooth transition.