Not All Companies Have Formal Severance Policy in Place

World At Work

Not All Companies Have Formal Severance Policy in Place
March 5, 2009 —

Slightly more than half of surveyed companies recently reported that they have a severance policy in place.

The 2008 Compensation Data survey from Compdata Surveys showed that when comparing those with a severance policy, 44.9% calculate severance based on years of service; about one-third use a combination of fixed number of weeks and years of service; and nearly 20% rely on employer discretion for severance pay.

The survey found that the percentage of organizations offering severance pay varies by industry: manufacturers have the highest percentage (61.4%), followed by insurance companies (61.2%) and not-for-profit organizations (44.4%).

“Some employees have made the news recently with suits against past employers under the federal Worker Adjustment and Retraining Notification [WARN] Act,” said Amy Kaminski, manager of marketing programs for Compdata Surveys. “WARN requires most employers with 100 or more employees to provide notification 60 days in advance of plant closings and mass layoffs.”

Survey results show that less than 40% of respondents provide outplacement services; those that offer the service provide it mostly to management employees. Twenty-five percent of technical/professional employees and 20.2% of administrative employees are offered outplacement services.

Survey methodologyCompensation Data 2008 contains data on 637 job titles ranging from entry-level to top executives. Information was collected from millions of employees across the country. The results provide a comprehensive summary of pay data, benefits information and pay practices with an effective date of March 1, 2008.
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This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.