Severance Benefits Facing More Cutbacks

 One of the next things to watch out for in this time of economic difficulty is a trend by companies to reduce severance packages for laid-off workers. Companies are looking at their bottom lines in this area—even as they are attempting to reduce their overhead by trimming their work force.

 

One of the most expensive benefits companies routinely offer is health care. So, it comes as no surprise that this is one of the first areas they will look to cut back in benefits to laid-off workers. Companies are offering fewer months of continued health coverage, and/or they’re offering to share the cost of this benefit with the laid-off employee.

 

Traditionally, many companies also have offered two weeks of severance pay for every year of service. That, too, is shrinking with many severance packages now consisting of only one week of pay for every year of employment. And, many companies also are capping their severance pay package at 26 weeks. So, if you’ve worked for your company for 20 years, you might not see a severance package of 40 weeks of pay.

 

You certainly can try to negotiate for the best package, but it is quite obvious who has the upper hand. And, while previously companies did their best to avoid the possibility of a disgruntled former employee, now they are taking a tougher stance for economic reasons. To read more about this trend of reduced severance packages, check out this article from The Wall Street Journal at http://online.wsj.com/article/SB124976696013817069.html?mod=djemCJ.