Here’s how to tell if your company’s layoff policy is “good” – CNBC

How to navigate through layoffs and manage affected employees

Andreypopov | Ivory | Getty Images

Fired this year have been largely confined to the hardest hit sectors of the economy, especially technology. But depending on your industry, you could face a layoff if the economy slows more drastically in 2023, and it’s not always clear what to expect from a prospective former employer as you go.

Recent headlines have shown just how broad layoff policies can be from companies, from the slash-and-burn approach taken by Elon Musk on Twitter to the pain some leaders are making public letters about job cuts outlining the various benefits granted to departing employees.

Layoffs are a reputational issue for companies at a time when the American public sees how companies treat their employees as the top ESG issue, according to an annual poll by Just Capital. Living wages, training and advancement opportunities, employee safety and diversity all play a part in human capital metrics, but that doesn’t mean companies get the upper hand on how they reduce headcount. “Layoffs can be done in an equitable manner,” said Martin Whittaker, founder and CEO of Just Capital.

“My general philosophy about letting people go is you want to treat people right because it all goes back to your brand and in today’s market employer brand is very important,” said Paul Wolfe, formerly head of HR at Indeed, who are now his own company runs consultancy firm. “People who leave are still talking about your brand,” he said.

But there is a big problem: many employees do not know how to evaluate an employment contract, in fact they cannot distinguish a fair dismissal from an unfair dismissal. Here are some recommendations from career experts for an employer-employee interaction no one wants, but better prepare for in advance.

Don’t sign anything on the first notification

A very important piece of knowledge to start with: you don’t have to sign an offer of resignation. In fact, career coach Fiona Bryan’s #1 piece of advice when you get a job offer is not to sign any document on the spot when you are first notified.

“It’s a very emotional time, and by law, your employer has to let you know how long you have to sign the paperwork,” says Bryan, a professional career coach at Ask A Career Expert and senior managing partner at The Bryan Group. “Take the offer down and read it. Ideally, take it to an employment lawyer, and some offer short, free consultations.”

“It varies by company, but you usually have 21 days to sign a layoff offer,” says Toni Frana, a career services manager at FlexJobs, a membership-based job site for remote and hybrid positions.

“You can always negotiate the package,” says Andrew Challenger, senior vice president at outplacement agency Challenger, Gray & Christmas. And he says employees are more likely to be successful in this environment, which, unlike a sudden, severe downturn like the Covid crash, is one where many companies are overhiring in a slowing economy. “This isn’t a panic, this isn’t a knife dropping,” he said. Employees will never have as much leverage in a negotiation on their way out as when they accept a job offer, but “this is a better time than during a huge crisis,” he said.

After you’ve had time to process the emotional, financial, and mental changes that a layoff brings, here’s how to know if your company’s layoff offer is a good one or not, and if it’s time to negotiate a better one. offer.

How you receive the severance payment is important

When it comes to severance pay, Bryan advises that people determine whether it will be paid in a lump sum or whether the company will keep them on payroll while they deposit the money into their accounts.

“When it’s paid in a lump sum, sometimes it’s nice to get your severance pay and find a new job,” Bryan said. “But sometimes there are benefits to people staying on the payroll so they can continue to list continued employment on their resumes with the company.”

If you still get a check from the company, Bryan said you can still say you work at the company on your resume. This is especially important if someone has only been with the company for a short time when they are laid off, and they may still be on active duty for some time.

How much money you can expect

Most companies that offer severance pay base it on employment with a company. Frana said the general rule of thumb is that companies offer one week to three weeks of your salary for every year you’ve worked at the company.

If you have worked for the company for a year, you can get between one and three weeks’ wages. But if you work with the company for 10 years, you can get between 10 weeks and 30 weeks of wages.

“If you were valuable to the company, maybe you could get extra money or ask for extra money,” Bryan said. “But two years of severance pay is usually the maximum. In my history of doing this, I don’t think I’ve heard anyone go past 24 months.”

Evaluate the health benefits and severance pay together

Besides how much you get paid, how quickly your health benefits expire is another part of a company’s layoff offer.

“I have found [health benefits] go through the month the person is still on payroll,” Bryan said. “So that’s another difference if someone stays on payroll, or if they get paid in one lump sum.”

If you’re on payroll for two months or a year for your severance payments, your health insurance coverage often lasts for that time as well, Bryan said. But if you take a lump sum, it is difficult for a company to continue your health insurance.

“It’s just the way insurance companies work. If a person isn’t an employee, a company can’t pay its insurance premium,” Bryan said. “While you are still on the payroll and getting your regular salary, a company can also pay your insurance premium.”

In today’s tight labor market, some companies offer more. In the recent layoffs, fintech company Stripe said it was offering the cash equivalent of six months of existing health premiums or continuing health care.

In the US it doesn’t matter how or if you are offered severance pay, the Department of Labor requires companies to provide a temporary continuation of the health benefits people previously received while working at the company. This is usually at the expense of the employee, and it is required under COBRAor the Consolidated Omnibus Budget Reconciliation Act.

While every company is different, they provide temporary coverage for about two months, Frana said. But these ongoing health benefits aren’t offered at the same rates you were offered as an employee and can get pricey for people who have just been laid off.

Challenger said the “master number” of total weeks of severance pay is the hardest to negotiate, but preconditions such as health care, longer stay on the payroll and PTO may have more room for employees to ask for better terms.

Career help to get a deal

While severance pay and health benefits are critical, there are additional resources companies can offer in your layoff package, and some you can negotiate if they aren’t initially offered.

Helping employees be aware of the parts of the package that don’t necessarily cost money or set major precedents is important because HR usually doesn’t want to do that, Bryan said.

Outplacement benefits, such as resume reviews, career coaching, and interview training, are important resources companies can offer in their termination benefits.

These are some of the resources people need most when they are laid off to help them get back into the job market, said Lisa Rangel, the founder and CEO of Chameleon Resumes, a resume writing and job posting consultancy.

“If the company doesn’t offer them directly, you can negotiate for them yourself,” Rangel said. “Or if they offer a general, general outplacement benefit, you can also negotiate which custom services will benefit you and see if they will.”

Other resources include connection to the company’s alumni network and even access to internal resources such as attorneys to help with legal needs. At online payments company Stripe laid off employees in November, they provided former employees with access to an alumni email address, as well as career and immigration support. The latter is extremely important for foreign visa workers residing in the US if they have a job.

While these services aren’t typically offered by every company, Bryan said an employee can and should always ask for what they need, and it helps if it doesn’t come at too high a cost. If you’re not being offered what you need or think you deserve based on your tenure and performance, she added that just like a job offer, anything is negotiable.

Wolfe said a company’s job goes beyond the financial benefits it confers. As an HR leader, he said in a layoff situation, “It’s my job to help you as much as I can and help you get your next job done and companies, if they care about employees, want to help.”

“If you haven’t been in a layoff situation before, maybe negotiation isn’t something you automatically think about,” Frana said. “You can always try to negotiate, if there is room for negotiation, you won’t know until you try.”

While getting fired is never ideal and often not expected, Bryan said you should always advocate for what you need and deserve.

“Departure arrangements can be good, if you know they’re coming and you’ve made some plans,” Bryan said. “But re-entering the job market takes resources, and it helps if you’re well prepared so another company can boast you.”

Leave a Reply