The economy is booming, unemployment is low but there may be times when you should consider offering an employee a severance pay package.
Churches in particular, should at least consider offering severance pay to an employee who leaves involuntarily because of the reality that most church employees don’t qualify for unemployment benefits.
A severance pay package can help bridge the gap in pay for church employees who leave employment involuntarily.
While this is not a required benefit, it is sometimes simply the right thing to do regardless of the reason an employee leaves employment.
For most churches the need for a benefit like this will be rare but taking the time to at least consider it will help you be ready should the need to use a severance pay package ever come up.
6 Things to Consider When Developing a Severance Pay Package
1. Employee Tenure
The length of time an employee is employed should be a consideration for offering a severance pay package.
Your package will be considerably different for an employee who has been with the organization less than a year as compared to someone who has worked for the church for a decade or better.
Take the time to determine how long an employee should be on payroll before qualifying for severance pay.
2. Position In the Church
While the position may not dictate what the benefit is, it may dictate additional available resources for the departing employee.
Create a basic package that all employees qualify for and additional benefits for higher level positions.
For instance, an Executive Pastor may be offered an outplacement service to help with resume writing, interviewing help and job search.
3. Unemployment Benefits
If your church does not carry unemployment insurance for staff, a severance pay package may simply be the right thing to do. Most people are surprised to learn that church employees don’t qualify for unemployment benefits when they lose their job involuntarily.
Even with low unemployment rates, it takes time to find a job. Bridging this gap in compensation can be the difference between a family struggling or making a smooth transition.
4. Available Budget
At the end of the day if there is no budget, you probably can’t support the package. However, if an employee is asked to leave and the salary is already in the church budget, extending the employee’s pay for a few weeks or months may not be a deal breaker.
However adding other benefits to the package may be. Outplacement services and counseling can come with a cost. If there is a budget for this it can help an employee through a difficult job transition.
5. What to Include in a Severance Package
Determine what to include in the package by establishing your budget and reviewing the paid benefits that the employee receives. Often severance package will include full pay, paid insurance premiums, continued contribution to retirement and outplacement services for the length of the severance agreement.
Create a policy that outlines the length of package. For instance, employees receive X number of weeks for every X number of years employed.
The extent of the package offering often depends on the available budget, the position the employee holds and the length of tenure.
6. Legal Consult
As with anything that intersects with employees and employer relations it is always wise to consult a labor law expert to help advise, create a severance agreement and implement a severance package that is fair and within the mandates of state law.
Anyone who has ever had to terminate a church employee understands the challenge of having a very difficult conversation. However, you can lessen the blow by creating a severance pay package that shows the love of Christ and helps bridge the employment gap.
You can access a sample severance pay policy in our library of church forms, documents and job descriptions.