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8 Steps for Creating a Successful Severance PolicyPlan As Far Ahead As Possible.Evaluate Your Current Severance Offering.Define Company Severance Objectives.Create A Formal Severance Policy.Be Consistent in Your Delivery.Communicate Your Severance Policy In Advance.Provide High Touch Outplacement.More items...?Mar 6, 2015

Step 1: Articulate Your Goals. Step 2: Identify Compensation. Step 3: Determine Specific Waivers, Releases of Claims, Acknowledgments and/or Contractual Assurances to Include in the Agreement. Step 4: Arrange to Secure Employer-owned Property. Step 5: Draft the Agreement.

1. What should a severance package include? Your severance package should include information about your financial compensation under the agreementfor example, how much you will be paid and how it will be paidas well as how you will be compensated for your unused vacation and sick time.

Continuation of insurance benefits, assistance finding another job, and other perks can also be negotiated as part of a severance agreement. Typical severance packages offer one to two weeks of paid salary for every year worked.

You can choose how to pay the severance compensation. A lump sum is the full amount of severance pay given upfront. The large amount might be difficult for your business to pay out at once. But with a lump sum payment, the former employee is more likely to qualify for unemployment compensation in following weeks.

A severance agreement is a legally enforceable agreement between you and your employer. You can negotiate it up front or upon exit.There is a risk in every severance negotiation that you may end up with what was originally offered, but you will not know until you make a written demand for more severance.

The typical formula for a severance package is one or two weeks of pay for each year of service. It can be paid in one lump sum or over a period of time. If paid all at once, it is important to understand the accompanying tax liability.