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Three Trends in Severance Pay & Benefits During COVID-19 Pandemic



It is as if “the economy as a whole has fallen into some sudden black hole,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics. Like most businesses now, ePerkz clients are facing financial pressures and having to make tough workforce decisions.


ePerkz helps HR teams manage furlough and severance events across the organization smarter, faster and in compliance with employment laws. Because of our unique position, we see trends in workforce reductions first hand. To help guide employers facing similar financial pressures, we have summarized three trends in workforce reductions.


1) Furloughs preferred over workforce reductions

With temporary financial pressures, which is hopefully the case with the COVID-19 pandemic, furloughs may be preferred by both employers and employees.  Employers can save on payroll costs and recall experienced employees when business needs returns. Furloughed employees can still collect state and expanded unemployment and potentially receive health benefits and 401(k) contributions until they are recalled.  Since furloughed employees are still technically employees, WARN act requirements don't apply. However, for furloughs lasting more than 6 months, employers may have to meet WARN Act obligations depending on your state and make some tough decisions at that point.


2) Severance packages include outplacement services

According to CareerPartners International, companies that provide outplacement support as part of their redundancy program often find that it can lower the ‘emotional temperature’ across their organization. By fully supporting exiting employees, employers demonstrate that despite the current challenging circumstances they are committed to their wellbeing.  Those who remain are reassured to know that if they find themselves in a similar situation, they are likely to receive the same support and consideration.


3) Raising and sometimes doubling minimum severance benefits

Severance pay is typically calculated using an algorithm that factors in length of service, management level, and/or whether an employee is exempt or non-exempt. A minimum and maximum is typically applied to the severance pay as part of the severance guidelines.  Due to COVID-19, more employers have chosen to raise their severance pay minimums for those who have been impacted due to our current crisis to help soften the impact of the job loss.


Next Steps

Now more than ever, it is important for employers to use a severance automation software to make sure that you can respond quickly to the changing landscape while staying in compliance with employment laws.


About ePerkz

ePerkz is the leading provider of severance automation solutions for HR, finance, and legal in the U.S. and abroad. Founded in 2017, ePerkz guides organizations of all sizes through the reduction in force (RIF) process smarter, faster and in compliance with employment laws. SAM has calculated and generated agreements for over $6M of severance benefits.



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