Where's the severance?

The laid-off workers that I wrote about in Sunday's piece on the closing of the Reynold's packaging plant in Downingtown didn't get a dime in severance. They didn't even get vacation pay for the balance of the year. Pretty harsh. Many of the nearly 150 who lost their jobs had worked at the plant for decades. 

Interestingly, one in four employers doesn't have any kind of severance policy, according to Mercer, the consulting company that specializes in employee benefits. That doesn't mean they don't pay severance benefits -- it just means they don't have a policy. (I'm sure Mercer would be available to help draw one up.) That info comes from 400 mid-size and large employers across the nation who responded to an April survey conducted by Mercer on severance policies. Mercer found that two-thirds of the organizations that responded had staff reductions, but that very few changed their severance policies, despite changes in their overall compensation practices.

It'll come as no surprise to anyone that executives are well protected, Mercer's survey shows. Nearly all, 98 percent, got severance and three out of four had some continuation of benefits. More than two-thirds had outplacement help with fewer than one in five having to have had worked for the company for a minimum period to get severance help. Typically, severance payments max out at year for executives.

By contrast, rank-and-file workers will receive up to 26 weeks, under many policies. And only 61 percent of non-union and hourly workers received some continuation of benefits. Less than half, 40 percent, had outplacement help. But even non-union/ hourly workers got severance -- 95 percent. The survey doesn't include a category for unionized hourly workers. The Downingtown workers were represented by the United Steelworkers of America. They blame the union for not negotiating a severance package. Their union rep, James "Tommie" Nolan, said union negotiators tried hard, but to no avail. 

Whether or not the union is at fault, the fact remains that it is not up to the union to pay severance; it is up to the company to pay it. And the new owners of this plant, the Rank Group of New Zealand, chose not to pay it -- at least not to rank-and-file workers. Managers got severance packages, but those packages included strict confidentiality requirements.