Importance Of Severance Packages
Severance packages are extremely important in today’s extremely competitive market. One reason is to show the goodwill of the company towards the departing employee.
A severance package is a sum of money that is paid to an employee who is leaving their company of employment. This is a practice followed by a multitude of companies around the globe in case of an employee leaving their job for various reasons which can include the removal of a post, layoffs, personal reasons and various other reasons. Unless dictated by an employment contract, an employer is not required by law to pay a departing employee any severance package.
Severance packages are extremely important in today’s extremely competitive market. One reason is to show the goodwill of the company towards the departing employee. Any employee who is leaving their employment might be susceptible to a shortage of money and a severance package can help them ride it out until they get an alternative source of income. This helps create a positive image of the employer in the departing employee’s mind and they will tend to refrain from bad-mouthing the employer or threatening the safety of the rest of the staff once they are terminated. This will ultimately help the employer hold up a good image in their industry when it comes to dealing with employee terminations.
Employees who agree to a severance pay also tend to be more dedicated towards their jobs in times to turmoil in their particular industry, since they know that they will have a certain amount of money to fall back on in case they are terminated and are no longer employed.
Another reason why severance packages are so important is because employers can protect themselves from any potential wrongful termination suits in the future. This can be ensured by requiring the employee to sign a release that releases the employer from all claims at the time severance package is agreed upon.