Sometimes the best way to convince an amazing prospective hire to join your company is giving them a clear idea of what they can expect to receive if they decide to leave. A great severance package can make your offer stand out from the pack, and can be the deciding factor that brings you an outstanding team member. Severance packages are flexible tools that can take your hiring process to the next level.
At the foundation, a severance package is a collection of pay and benefits that an employee will receive if and when they move on to another place of employment. You can create a standard severance package for all employees across your company, or create individual packages that acknowledge the unique talent that each individual brings to your organization.
Structuring a great severance package is not an easy task; there are a number of factors to consider, and a balance between what you give and what you receive. Severance packages not only give your employees peace of mind, but they also protect your business interests in the form of non-disclosure agreements, dispute resolution options, and more.
If you need help evaluating a severance package, or need to build a package from the ground up, consider working with a team of legal professionals who are experienced in these types of business contracts.
Some of the things that are most attractive to prospective hires in a severance package include:
- Compensation
- Health insurance
- Bonus payments
- Stock options
- Vacation and sick leave payouts
- Outplacement support
- References
These act as incentives to convince someone to sign on as part of your team. They provide the peace of mind that in the event the position isn’t the right fit, there is a degree of security waiting that can make the transition to a new opportunity easier to navigate.
Some of the things that make a severance package beneficial to employers include:
- Non-compete agreements
- Non-solicitation of clients or employees
- Non-disclosure agreements
- Guidelines for the return of company property
- Dispute resolution
- General release of liability
- Confidentiality
These terms ensure all parties know what to expect in the case of a departure. They deliver a degree of clarity that is often lacking when an employee chooses to move on to another position, and can go a long way toward avoiding lingering animosity.
Going over the details of a severance package
The language within a severance package should be carefully considered. The wording must be clear enough for prospective employees to understand the full range of what is being offered. However, the language must also protect the terms from legal challenge. In many cases, a well-worded severance package leaves no ambiguity, which makes it less likely that an employee will challenge the agreement in court.
You also must consider how to extend the severance package, and at which stage in the hiring process to broach the topic. Some companies have an existing human resources staff to handle this part of the hiring process, while others prefer to have the owner or a top representative present the package directly to the prospective hire during the interview process. Just as important is who will handle discussing the severance package when the time comes to put the terms into action.
Discussing the details of a severance package with an employee who is leaving on good terms is a different experience than having that discussion with an employee who is being let go. How these interactions are handled can make a world of difference in the outcome of the transaction. The goal is always to part on the best of terms, but when that isn’t possible, protecting what you’ve worked so hard to build is a central concern.
If you’re considering adding severance packages to your company’s offerings, you don’t have to tackle the task on your own. Partner with an experienced business law attorney for help in evaluating a severance package or building a package from scratch. When you come in, you’ll share some basic information about your company, your existing human resources structure, and what you hope to achieve by including a severance package as a hiring incentive.
You’ll also learn more about how a great severance package can protect your business interests, from equipment to clients, to intellectual property. Even more importantly, you’ll be backed by a strong legal team who can help you deal with any issues that arise down the line.
Employment agreements and severance packages mark the beginning of the employee/employer relationship, but there are many other business agreements that may be needed as the years pass. Having a trusted legal advisor periodically review your company’s documents is the best way to rest assured your interests are covered. It also ensures your company retains the ability to recruit among the very best professionals in your field.
Get started today by booking an appointment to discuss how adding a severance package to your existing benefits can improve your onboarding process. You’ll also have an opportunity to discuss the full range of other business agreements that are a good fit for your company.
