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Consider alternatives to cash severance

by on
in Firing,Human Resources

If you offer severance packages, don't assume workers want only money. With rising health care costs, they are choosing less severance pay and more outplacement benefits, such as continued health coverage.

No federal law requires you to pay severance. Only five states mandate severance pay, Hawaii, Maine, Massachusetts, Pennsylvania and Rhode Island, and only in rare cases.

Advice: Negotiate noncash options into your severance plan. You could save money plus avoid legal trouble: A departing worker who feels he has squeezed some concessions out of you is less likely to sue later.

Some severance perks that could save you dough:

  • Continuing payment of benefits for a limited time.
  • Releasing the worker from a noncompete agreement.
  • Allowing the employee to keep an advance of expense funds.
  • Letting the employee keep his laptop or other company equipment.
  • Agreeing not to contest his right to unemployment compensation.
  • Helping the worker pay for job search costs or moving expenses.


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