Termination

fridaysoff · May 2004

We are getting ready to terminate an employee and are giving him a severance package of 6 weeks salary and paying out his unused vacation. We would like to mail his checks each week for the 6 weeks of severance pay, mostly in order to ensure his cooperation in turning over files, etc. Question: If we write a payroll check to him each week, is he technically still an employee for purposes of health insurance, 401(k)plan, and whatever else I may not be thinking of?

HR in CA · May 2004

I would review the terms of both your 401(k) and health insurance. When my last company closed, we continued the health insurance through the severance payments, but discontinued the 401(k) per the plan. Also if your company has accrued vacation, you may need to pay out any accural during those 6 weeks. It may not benefit you to leave him 'active' during those 6 weeks.

marc · May 2004

I think he is technically still an employee - accrueing vacation and sick leave and still vesting on the other plans.

Sue · May 2004

Why not hold the entire severance check and distribute it upon receipt of the outstanding items? Continuing to pay him through payroll seems to create a "gray" area. I would have the agreement also release the company from all future claims.

In some states you can "assign" the wages to delay the start of unemployment compensation. You could add that wording to the agreement.

Don D · May 2004

I think not. There's nothing in your post to indicate he would remain 'an active employee' after you terminate him. I don't see this as much different from RIFfing an employee under a severance agreement during which he has 21 days to sign the agreement. Simply tell him his termination date is X and his severance will amount to Y, paid in 6 equal monthly/weekly installments of Z. Maybe also state: The first severance installment of ($) will be on June 6, 2004. Any additional payments will be withheld by the company until and uless you return the following property. If these items have not been returned to (Mr. Bob) by (date) this entire agreement is null and void. Or why not just make the whole offer/acceptance of severance contingent on returning whatever it is you feel he/she has that belongs to the company.

fridaysoff · May 2004

Don: Thanks so much for your help. This is the way we will proceed.

fridaysoff · May 2004

Thanks, everyone, for your comments. As a first time user this has been a great experience.

Pork · May 2004

FRIDAYSOFF: Welcome to the forum, one does not normally go wrong in following "Dandy Don's" advice.

PORK

Termination

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