Breaking up is never easy, especially at Christmas time! Management is concerned that firing an employee may not go well (even when it’s necessary). The employee may experience anger, fear, and many other emotions that well up, not to mention pondering what to tell the spouse and kids. Their questions include: “How will I pay my bills? “I’m over 60; will anyone hire me at my age?”
Generally speaking, the organization doing the firing is just as nervous as the person being fired and wants things to go smoothly, without a fight. This desire may work to the benefit of the organization as well as the person being terminated. Knowing this allows the organization to think things out and demonstrate graciousness. The employee has time to ask for things which may allow for a softer landing.
Sometimes the organization will choose to prepare a severance. If you’re preparing a Severance Package Agreement, tread carefully. We strongly urge bringing in legal or qualified HR assistance to help with the crafting of packages.
What’s a Severance Package Agreement? A Severance Package Agreement offers a list of concessions both parties will make in the termination process. Such an agreement may include:
• Pay extension.
• Pay for unused Vacation and Sick Leave.
• Reference letter.
• Health benefits extension.
• No-contesting of unemployment.
• Retirement program transfer.
• Hold harmless statement.
• Amount of time the employee has to sign the agreement.
Here are some concerns with severance letters.
While setting a time limit to sign the agreement in general is not a statutory requirement, generally the employee has to have a “reasonable time” to consider it. If the employee being offered the severance agreement is forty (40) years or older, he or she is protected by the Age Discrimination in Employment Act (“ADEA”) of the Older Workers Benefit Protection Act (“OWBPA”). By law, when only one employee is offered the severance agreement and a release of ADEA claims is included, the employer must provide the employee with twenty-one (21) days to review and consider the proposed severance agreement.
Any waiver of rights in the letter should also communicate to employees their rights regarding the severance letter, including an advisement for the employee to consult an attorney. We, as employers, need to remember that gone are the days when we could slide an action through a loophole and hope the employee doesn’t access his/her rights. As a rule of thumb for 21st century HR, employers have a general obligation to inform employees of their rights so that, if an employee didn’t access rights, it was their choice.
There are more pieces to this puzzle, but, may we suggest if you are beginning to consider terminating an employee, its time to get help. Terminations are not a DIY moment. At Executive Advantage, we have the expertise to make this difficult and stressful situation livable.