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Susan M. Heathfield

Why Severance Makes Sense

By December 12, 2012

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With new rounds of layoffs hitting the news weekly, even with the holidays approaching, it's time to consider the topic of severance pay.

Severance pay is money that an employer might want to provide for an employee who is leaving their employ. Normal circumstances that can warrant severance pay include layoffs, job elimination, and mutual agreement to part ways, for whatever reason.

There are reasons why you might want to pay severance. These include helping your former employee land on his or her feet with an economic cushion to help bridge the gap to their next employment

In paying severance, you treat the former employee with respect as a human being. You position yourself as an employer of choice which is visible to the employees who remain. You gain a reputation as a fair, employee-oriented employer with the people you may want to recruit.

And, while I have no handy evidence to support this, I believe that when you help people and treat them with respect, they are less likely to sue your organization. You further insure this by asking an employee to sign a release of claims in return for the severance package.

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