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Why Employers Need to Provide Severance Packages to Employees

By Edited Feb 10, 2014 0 0

What are severance packages? These are benefits that an employer gives his employee upon termination or end of contract. Some people say that employers should always provide these benefits, but some do not agree.

Actually, employers are not required to give severance packages to their employees. However, there are some situations that they will be obliged to offer them. Here are some circumstances where an employer needs to provide severance packages:

  • The company has a practice of giving severance packages.
  • The employment contract says that terminated employees will receive severance benefits.
  • There was a mass layoff of employees or the company shut down.

If these situations are not present, any employer can opt not to provide severance packages to a terminated worker.

While giving severance packages is not required by the law, there are some experts who still advice employers to offer them. Most of the time, the offering of a severance package is an ideal way to thank an employee for his services in the company, and to ensure his signature on a release of claims.

If you are an employer and you are thinking of giving an exit package for your employee, it is not that easy. You will need to think of the "items" that you will include in the package. Some of the items you may consider include:

  • Financial support – This is also called income replacement. It will be the employee's temporary source of income while he is looking for a new job.
  • Insurance – Offering some kind of insurance such as health or dental policy is another good item to include in the package.
  • Reason of layoff or termination – Most employers do not disclose the information for their employees' termination. But in some cases, you may include this reason to make him aware of his weaknesses.
  • References – Some employees worry that their former employers would say bad things about them. To avoid this problem, have an agreement that what you will say about him would be beneficial for his job application. Seek the help of an employment lawyer in Los Angeles regarding this issue.

Providing severance packages is a good way to end an employee-employer relationship. However, make sure you give the same packages to different workers. If an employee finds out that you did not give him the usual severance package you offer, he might call a Los Angeles employment attorney and file a legal complaint against you. You would not want such a thing to happen, would you?



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