US golden handshakes still shine

by 31 Mar 2009

Severance packages for most laid off employees at large US compa nies have remained virtually unaf fected by the economic downturn.

Eighty per cent of large US companies made layoffs in the past 24 months, and 45 per cent intend to make further reductions in the next 12 months. More than half (51 per cent) of companies offered a standard one to two weeks of pay for every year of service, and an other third (33 per cent) varied their payouts based on a formula that typically combined years of service, salary level, and/or grade.

However, according to a recent Hewitt survey, as companies look to make additional cost reductions in response to ongoing economic conditions, many say they will take a closer look at their severance packages.

The survey revealed that one in five companies (20 per cent) in tend to make changes to their severance plans and nearly a third (31 per cent) are unsure. Of those making changes, 43 per cent plan to reduce cash pay ments, and one in five (21 per cent) plan to reduce benefits.

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