Firing an Employee

Severance Packages

Firing an employee isn't pleasant but severance packages can soften the blow. This article offers helpful guidance on providing severance packages for laid-off employees.

Regardless of the circumstance, it's always difficult to lay off valued employees. But no matter how difficult it is for you, it's ten times harder for your employees.

Severance Packages

Usually through no fault of their own, they are faced with the prospect of losing their primary source of income and entering an uncertain job market. It's a situation no one wants to experience, but it's one that commonly occurs in the rollercoaster environment of small business.

Most employers are eager to do whatever they can to minimize the impact of layoffs on their staff. As a gesture of goodwill, many offer laid off employees severance packages.

Although severance packages can't completely replace the loss of a job, they do go a long way toward mitigating its effect, at least until the employee can find a position at another company.

Since they aren't required by law, the severance package you offer your employees can be as comprehensive as you want it to be. Some of the more popular options include the following:

Monetary Benefits

The amount of severance pay you offer your employees is entirely up to you. To be fair the employees, employers often base severance pay on length of service. For example, some employers offer displaced staff a week or a month's pay for every year of employment with the company. Also, to minimize the impact of monetary severance on the company's budget, you may want to structure payments over time rather than paying it in a single, lump sum.

Health Benefits

Another major concern for laid-off employees is health coverage. Employees have come to expect health insurance to be included among their fringe benefits. When the job disappears, so do the fringe benefits, leaving employees and their families vulnerable.

From a legal standpoint, employees are allowed to maintain their health coverage for eighteen months under the COBRA program. The downside (from the employee's standpoint) is that they are responsible for paying the amount previously covered by their employer. However, employers can choose to continue to pay the employer's share to soften the blow on their staff.

Job Placement Benefits

Displaced employees usually find themselves unprepared to re-enter the job market. This is especially true for individuals who have worked at the same company for a long period of time. To find another job, they are going to need assistance in everything from resumes to interviewing.

You can help your employees by including career placement services in your severance package. Some employers choose to offer career placement services in-house while others opt to contract with outside providers. Either way is fine. The important thing is that you are doing your best to take care of your employees even after they are no longer your employees.


Although it isn't technically a severance benefit, your patience may be one of the most important things you can give displaced employees. Take time to listen to their concerns and give them the leeway they need to make the best of a difficult situation.

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