How to create an effective severance package
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How to create an effective severance package

| Aug 28, 2020 | Business law |

It has been a challenging year, and reducing your staff — maybe permanently — may be the only way your business can survive. However, people will remember how you terminate their employment. Do it badly, and they will leave upset and talk badly about you and the company. Do it well, and they will remember the happy years they had at the company.

Negotiating a severance package is an essential part of laying off an employee.

  • Be realistic: You need to find a happy match between what the employee asks for and what you can afford. Saving a few hundred dollars, but ending things on bad terms is not good business. Try to find a fair compromise.
  • Consider different forms of compensation: Do not think only in terms of cash. You may be able to make up value by continuing to insure them for a few months. Perhaps you could let them keep the company car or work laptop if you are downsizing and have no use for it.
  • Help where possible: If you have contacts who could use your employee, offer to put them in touch. Knowing they have a job to go to reduces their need to drive a hard bargain, and they will thank you for the help. Offer to give them a good recommendation if they are a good worker.
  • Protect your future: Consider a non-compete clause, however, it would be unfair to make them sign too broad a non-compete when you are unable to provide them with a job.

When terminating a contract, it is vital to abide by Kentucky labor laws. Seek legal help to make sure you do.