Years of service was the main basis for the calculation of severance benefits (76 percent), followed by salary/pay (38 percent), and position (32 percent), according to a new survey by ASE, a national employer association based in Troy.
The survey, titled “Severance Pay, Policies, & Practices,” seeks to provide a comprehensive look at the various aspects of severance policies and programs, including severance benefits, outplacement assistance, and executive severance plans.
Highlights of the ASE 2024 Severance Survey include:
- 58 percent of employers reported providing severance benefits in the last 12 months, whereas only 18 percent provided outplacement services.
- Most organizations (42 percent) do not maintain formal or written severance policies. In fact, just 22 percent of employers reported they maintain formal severance plans and polices.
- Years of service was the main basis for the calculation of severance benefits (76 percent), followed by salary/pay (38 percent), and position (32 percent).
- One week of pay per year of service was the most common formula that employers use to determine severance pay (57 percent), followed by two weeks’ pay per year of service (24 percent).
- Although 29 percent of employers experienced a reduction in their workforce in the last 12 months, only 41 percent provided outplacement benefits to those affected.
“The survey results highlight a potential gap in the current landscape of employer practices, suggesting the need for businesses to formalize their policies around severance benefits,” says Mary E. Corrado, president and CEO of ASE.
“Establishing clear and comprehensive severance policies is not just a best practice but a crucial component in fostering a supportive work environment and ensuring consistent application of policies.”
The data for the survey came from 125 organizations from across Michigan. Organizations with 100 employees or fewer nationally made up approximately 39 percent of the survey sample, while organizations with 101-499 employees nationally represented 40 percent of the sample.
The remaining 21 percent of the sample came from organizations with more than 500 employees. A variety of industries have been represented in the survey, with durable goods manufacturing (45.6 percent) leading the pack. Trades and services (22.4 percent) were the second-largest industry representation.
The survey is available at no cost to ASE members via the ASE survey library. It is available for $415 for non-member survey participants, and $825 for non-member non-participants. Email Kevin Marrs at kmarrs@aseonline.org for more information.
, followed by salary/pay (38 percent), position (32 percent).){kind=link}