Severance Depends on Rank, Firm Size

May 16, 2002 ( - Whether an employee gets a severance package, and what type of package they get, depends mostly on how high up they are in their company's organization and their employer's size, a new survey found.

According to the Mercer Human Resource Consulting study, executives typically get severance pay for a longer time period as well as continued benefits and outplacement help. Severance packages at large companies are typically richer than those at smaller firms, Mercer said.

It was clear from the survey that the issue wasn’t academic to the respondents: 71% reported that they’ve reduced their workforce since January 2001 because of cost cutting or restructuring.

The survey also found that:

  • 72% of executives can expect their benefits to continue for some period following a layoff, compared to 57% of nonexempt clerical/technicians employees and 49% of nonunion hourly employees,
  • six in ten executives will get outplacement help following a layoff, compared to just 19% of managers and 20% of professional/technical employees,
  • non-compete agreements are most common for executives, 48%, professional/technical employees, 47%, and managers 43%,
  • 57% of respondents required a year of service before an employee was eligible for severance,
  • two weeks is the minimum severance offered regular employees while executives enjoyed a four-week minimum

The 2002 US Severance and Strategy Survey, conducted by Mercer in March 2002, drew responses from 566 US employers.