American Society of Employers (ASE) Releases 2019 Severance Pay, Policy & Practices Survey Findings

DATE:  September 24, 2019
CONTACT:  Heather Nezich, Communications Manager, 248.223.8040, hnezich@aseonline.org

 

Livonia, Mich.  September 24, 2019 — American Society of Employers (ASE), one of the nation’s oldest and largest employer associations, has released its 2019 Severance Pay, Policy, & Practices Survey.  The survey, covering Michigan employers, examines formal and informal severance practices of Michigan employers.

Highlights of the survey include:

  • Just 18% of those surveyed maintain formal severance plans or policies governing severance arrangements.  More often, severance arrangements are determined on an ad hoc or case by case basis or are included in employment agreements.
  • The most common events that typically trigger severance is position elimination (78%), permanent layoff (56%), at-will termination (47%).
  • The most prevalent method for calculating severance for non-executive plans is years of service (80%).  A majority of those surveyed (57%) grant one week of pay per year of service, typically to a maximum of 24 weeks.
  • Severance benefits for executives is most often negotiated on an individual basis.
  • Half of those surveyed do not continue employee benefits during the severance period.
  • Fewer than half of those surveyed (46%) provide outplacement benefits to those affected by a reduction in force/layoff.  Of those that do, a majority (90%) use an outplacement firm to do so.

The ASE 2019 Severance Pay, Policy & Practices Survey findings were announced by ASE President and CEO, Mary E. Corrado.

“Although it is not surprising to see so few companies maintain formal severance plans, we caution employers to be diligent about applying these benefits consistently. The benefit of offering severance or outplacement assistance to employees is the positive impact on the company reputation and employee brand,” stated Mary E. Corrado, ASE President & CEO.

Background information on the ASE 2019 Severance Pay, Policy, & Practices Survey:

  • 139 organizations from across Michigan participated.
  • Organizations with 500 or fewer Michigan employees made up nearly 85% of the survey sample, while organizations with 501 to 1,000 Michigan employees represented 6.5% of the sample. The remaining 8.6% of the sample comes from organizations with over 1,000 Michigan employees.
  • A variety of industries are represented, with Manufacturing organizations representing 65.5% of the survey sample.

To obtain copies of ASE’s 2019 Severance Pay, Policy, and Practices Survey, ASE members should visit their Dashboard on the ASE website or contact ASE’s Compensation and Benefits Surveys department at surveys@aseonline.org or 248.223.8051. These surveys are available at no cost to ASE members.  Non-members can purchase the report for $525.