Survey Shows Severance Amounts Unchanged in Three Years

In its most recent survey regarding severance, ClearRock, Inc., found eighty percent of employers are providing the same amount of severance to as they did three years ago.

Nearly all respondents (98%) stated Reduction in Force/Job Elimination as a reason for providing severance.  58% provide severance based on Poor “Fit” for Job or Organization. 

More than 6 out of 10 employers state “Years of Service” as a determining factor for an employee to receive severance.  This was closely followed by the fact that the employee must be full-time (nearly 61%).  The percentage dropped to less than 20% for part-time Employees. 

Years of Service was also the top factor for determining the amount of severance by nearly all respondents.  Just over 50% stated “Salary Grade/Level” as a factor while 40% said full-time employment status and pre-negotiated employment agreements are factors.  Many respondents added that the reason for exit was the deciding factor whether an employee receives a severance or not and, if so, the amount they receive. 

More than one hundred organizations participated in ClearRock’s 2016 Severance Survey.  Seventy percent of respondents are from companies headquartered in New England and the remaining thirty percent are spread across the country.  Respondents represent more than fifteen industries with the top three being Pharmaceutical/Biotech, Financial Services, and Health Care.  The largest number of respondents (30%) was from companies with 101-500 employees.

When an employee is laid off, they are often required to work through a specific date in order to qualify for severance.  In this year’s survey, 38% of organizations stated they do not have policies on how work-through dates affect severance.  This is an improvement, however, on the more than half who responded that they did not have a policy related to work-through dates in ClearRock’s 2011 severance survey.  More than one-third of respondents do not provide any severance if the employee leaves during the work-through period.

Organizations noted that, in general, severance payments continue whether the employee finds another job or not as long as the employee remains through the work-through date (if that is even a requirement).  Severance would stop, however, if the employee accepts another position within the company.

To request a free copy of the 2016 Severance Survey Report, please contact ClearRock at