Companies in these industries are topping the charts with nearly half offering one month or more of pay for every year worked. However, caution should not be thrown to the wind just yet since severance packages are becoming more restrictive as the economic slump continues, according to The Global Severance Practices Survey released by Right Management Consultants.
While not among the most generous to top executives, the banking industry tends to be more generous than other industries to laid off professional and technical workers. More than 19% said they offered a departing mid-level employee one month of severance pay for each year of service. On the other end of the spectrum, the engineering/construction/logistics field was the least generous industry when it came to executive severance packages. Four out of 10 companies (42%) said a departing top executive would receive less than one week of severance pay for each year of service and 35% said they offered that same, one-week package to a laid off technical employee.
“While no single industry has a corner on fairness when it comes to severance packages, the health care, energy and IT industries tend to use a more liberal formula when calculating severance pay for top executives,” said Geof Boole, Executive Vice President of Right’s Career Transition Line of Business, in a statement. “But this prolonged economic downturn has resulted in a subtle tightening of severance pay in nearly all industries. Companies cannot afford to be as generous as they may have been a year or two ago.”
Not surprisingly, as you move from the top, the difference in severance packages offered by various industries was less dramatic for laid off professional and technical workers. Most industries reported offering mid-level employees one or two weeks of severance pay for every year of service.
The most common formula used in calculating severance pay was one week of pay for each year of service, with nearly 40% utilizing this formula. Additionally, approximately 75% of US companies, out of 1,500 companies in 32 countries, surveyed, said that severance was based primarily on years of service.