Some of the biggest tech industry players, including Google’s parent company Alphabet, Amazon, Meta, and Microsoft, announced mass layoffs in recent months.
In most cases, companies are not legally obligated to pay workers wages or provide benefits after employment ends. More often than not, however, they are motivated to do so to protect themselves from responsibility and to inform workers to ease their painful feelings while they look for new opportunities.
“Retirement is a very formal version of ‘Don’t go crazy, just walk away,'” said Giacomo Santangelo, an economics professor at Fordham University.
“Companies are looking at how much they have to give you so that you can leave quietly because it hurts when people are laid off. They try to soften the blow a bit. ” he told CBS Moneywatch.
The amount of severance pay that a laid-off worker receives varies widely by industry, company, and employee tenure, but severance packages tend to include some standard elements.
What is the content of the retirement allowance?
The most variable part of a retirement contract is the amount and duration of the additional salary and benefits that the worker receives.
A retirement package may include a combination of:
- monetary compensation
- Extension of health care and other benefits
- part of the bonus
- Early vesting of shares
- Outplacement assistance or career coaching
“We see commonalities in what people are getting, but not in duration,” said Santangelo. “We’ll see if the benefits extend beyond the end date, but it’s up to the company what it’s worth. There’s no standard.”
If your unemployment is part of a mass layofffederal law requires companies to give at least 60 days’ notice under the Workers Adjustment and Retraining Notice (WARN) Act.
But in most other cases, “companies don’t have to pay severance pay at all. They can’t give anything,” New York City-based employment attorney Robert Ottinger told CBS Moneywatch. rice field.
How are retirement benefits calculated?
In Ottinger’s view, one week’s wages for one year of service is the minimum a company should offer, and four weeks for one year of employment is considered generous.
“That’s the formula. It’s the number of weeks you get in a year,” he said.
Banks or financial services firms, for example, are expected to offer several weeks of severance pay for each year of service, said employment attorney Sahara Pines.
don’t expect bonuses
Bonuses that are not part of a worker’s base salary are also very valuable, but are not always included in retirement packages.
In California, performance-based bonuses are treated like wages. Employees are legally entitled to any bonuses they earned when they were terminated. Other states have implemented less protection.
“As for bonuses, generally speaking, no one always gives a prorated portion unless the year they plan for is almost over, which is usually lost outright,” Pines said. .
However, depending on how the bonus is earned, there is room for negotiation.
“If the bonus is based on an objective indicator that it has been achieved, it can be claimed that the bonus has been earned up to that point, and may need to be paid based on the terms of the bonus commission.
Compensation for technical workers can be complicated, so retirement packages are usually complicated as well. From small tech startups to giants like Google, Company stock can be more valuable workers rather than salaries.
“Many tech workers actually work for shares, stock options, or stock grants that vest over time,” Ottinger said. “This is how most people who work at tech companies actually make money. Whether you work at Google or at a smaller tech company, you need a piece of the pie.”
In the event of a layoff, the company will not automatically accelerate the vesting of the shares, in which case the vesting of the shares will cease. But some will, including some of the larger tech companies that have recently cut headcount.
What did Google employees get?
When Google announced earlier this month that it would lay off 12,000 employees, CEO Sundar Pichai said: Said US workers are paid during the 60 day notice period required under the WARN Act.
The company also checked other boxes.
Employees will receive a minimum of 16 weeks’ salary, plus two weeks’ salary each year at Google, to accelerate stock vesting. The company said it would also pay the worker her 2022 bonus and unused vacation days. It also said it has extended health care benefits for its employees and is providing job placement services for six months.
Microsoft said on January 18th: cut 10,000 jobs, Said Benefits-eligible U.S. employees will receive 60 days’ notice before termination of termination and receive an unspecified amount of “above market” retirement benefits, along with six months of medical benefits, career transition assistance, and stock rights. Receive confirmation.
Can you negotiate?
In some cases, it doesn’t hurt to ask for a better exit package if you’re unhappy with the offer, experts say. Please be careful.
“Generally speaking, when it comes to mass layoffs at these giant tech companies, there are very few exceptions, because otherwise the floodgates are opened,” Pynes said. “SMEs don’t necessarily set such a big precedent, so they might be more flexible.”
Ottinger agreed that big companies are unlikely to be upset.
“If your company decides to lay off 12,000 people, and they make a change to one guy, everyone’s going to freak out,” he said.
But if you’re simply getting fired, it’s often worth negotiating a better retirement package, especially if you’re a long-term employee.
“There are a lot of people out there who can get a big boost just by asking. Usually they’ve been there for a while, they’re valued employees, and the company wants to stay on good terms going forward.” ,” said Pynes.
Take advantage of the goodwill acquired during your tenure with the company, he advised.
“Just asking if you’re related to someone who has the authority to sweeten the pie for you could do the trick.”