Compliance

Dear Workforce How Much Severance to Provide

By Staff Report

Sep. 7, 2011

QDearWorkforce:


Onthe average, how many weeks do companies give in severance packages?


–Kathy Read, San Francisco, CA 


ADear Kathy: 


Severance varies greatly based on thetype and company, as well as the type of employee. The average severance whenall levels are combined — hourly to executive — is 1 ½ to 1/ ¾ weeks pay peryear of service. 


Certainly, that changes a lot when youget into golden parachutes and all that. But for employees earning less than$150,000, those averages are probably pretty accurate. 


Bill Hollett of Drake Beam Morin usesmainly age and level as factors when determining how much severance a companyshould give. Those factors affect how much time it takes to go into a new job. 


Hollett also says that he recommendsthat non-exempt employees be given a minimum of one week of pay for each year ofservice, even if they’ve been there a short amount of time, and that they begiven a minimum of about six weeks’ severance. 


He recommends that exempt employeesreceive at least two weeks’ pay per year of service, with a minimum of threemonths’ severance and a maximum of one year’s severance. 


Severance of course also varies bycountry; European countries sometimes have much greater requirements than in theU.S., where there are none. 


SOURCE:Bill Hollett, vice president of organizational consulting, Boston-based DrakeBeam Morin, December 5, 2000. 


E-mailyour Dear Workforce questions toOnline Editor Todd Raphael at raphaelt@workforceonline.com,along with your name, title, organization and location. Unless you stateotherwise, your identifying information  maybe used on Workforce.com and in Workforcemagazine. We can’t guarantee we’ll be able to answer every question.

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