Small businesses are not immune to the current economic troubles. Unfortunately many have had to make the difficult decision to downsize staff in order to keep the business open. Terminations or lay offs are uncomfortable for all parties involved. How you handle a lay off can have a significant impact on your bottom line, however.
What is a severance package?
A severance package is something more commonly associated with highly paid executives at large corporations. Many small businesses opt to use them as well to foster goodwill. A severance package is something put together by an employer that usually includes compensation and continuation of benefits for a period of time. It may range from two weeks of pay plus accrued vacation to six months of pay and a year of health insurance.
Why provide severance?
The primary benefit of offering a severance package is usually that the former employee must sign a separation agreement in order to receive the severance pay under which he or she waives any claims they may have against the employer. This could protect the employer from a potential lawsuit in a very direct way. Indirectly it also avoids litigation because the employee is likely to leave with less ill will towards the employer.
How do I provide a severance package?
If you decide to lay off or terminate an employee and are interested in providing some sort of severance package, it is important to contact an attorney to draft the agreement for you. There are specific guidelines that must be followed in order for an employee to validly waive potential claims against an employer. The attorneys at JUX Law Firm have extensive experience working with contracts like severance agreements. Retain us today to work with you to prepare a fair severance package that also protects your business. Planning ahead can save you the costs of future litigation. Call attorney Aaron Hall at JUX today.