Severance Packages: Best Practices for Calculating and Communicating Them
Severance decisions sit at the intersection of legal risk, employee relations, and business judgement. For employers, the challenge is not simply deciding whether to offer severance, but determining how much to offer, under what circumstances, and how to communicate it without creating unnecessary exposure.
Understanding the Legal Starting Point
Despite common assumptions, severance is rarely required by law. Outside of contractual obligations, collective bargaining agreements, or statutory notice requirements tied to layoffs, most severance arrangements are discretionary.
Before discussing numbers, employers should confirm what obligations already exist and whether prior decisions have set informal benchmarks.
Let the Reason for Separation Drive the Analysis
Calculating Severance with Defensibility in Mind
Severance as a Risk-Management Tool
The Importance of Clear, Careful Communication
Avoiding Unintended Precedent
Revisiting Severance Practices Over Time
Severance is not just an end-of-employment expense. When handled thoughtfully, it is a strategic tool that helps employers manage risk, preserve credibility, and bring closure to difficult transitions.
This document is designed for general information only. The information presented in this document should not be construed to be formal legal or tax advice nor the formation of a lawyer/client.
For further information please contact me at www.kmckernanlaw.com kevin@kmckernan.com or 718-317-5007.