Question: "Is there a rule of thumb when it comes to determining severance for an employee? What factors should be considered when calculating severance (length of service, position in company, etc.)? What seems to be the “norm” in this economic time?" — Sheri Thomas
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Luckily being in central Massachusetts we have had less difficulty in this area because we have not had to let any employee go because of the economy. But when a person is laid off, what we do is offer them cobra (at their expense) and pay them any owed vacation time. So no severance pay. If we fire with cause then they are not even allowed by the state to collect unemployment.
This is capped at 1 – 2 years.
Length of service – 2 weeks for every year worked, except if it’s an executive position. Medical coverage is paid for during that time. Then, the Cobra kicks in if they want it. Unused vacation days are paid out to employee.
We don’t do severance pay. If someone is let go (whatever reason), they are let go.
When we do severance (rare), we give two weeks regardless of the length of employment.
We have 1 week per year worked and max out at 10 years. I think this maxing out at 10 years is generous in today’s market. Most others I know of max out at one month pay.
We use 2 weeks’ pay plus 1 week’s pay for each year or fraction thereof of continuous service, up to and including a maximum of 26 additional weeks (max pay = 28 weeks).