5 Reasons Companies Outsource Administration of Reductions in Force
You and your team are experts in supporting hiring, performance management, and training and development of employees. What you probably don’t do a lot is handle the process of mass layoffs and reductions in force. During these transition periods, it’s great to have a partner with proven experience to help guide, simplify, and administer the process. Why? Here’s 5 reasons:
Saves Time and Simplifies Administration
Today, many companies are considering alternatives to traditional severance plans. Supplemental Unemployment Benefit ("SUB-Pay") Plans offer a cost effective alternative. In addition, companies that outsource SUB-Pay Plan administration reduce the stress and workload of a reduction-in-force on corporate HR and payroll staff.
Provides Turnkey Services for Displaced Workers
Outsourcing provides displaced employees with call center support, Interactive Voice Response ("IVR") capabilities, and web support services to respond to their issues, and assistance to reduce their anxiety and stress during their reemployment transition.
Saves Your Company Money, While Providing More Employee Benefits
Because SUB-Pay is not considered wages for FICA purposes the employer saves up to 7.65% per benefit paid, while their former employees save 5.65%. In addition, by supplementing state unemployment insurance benefits with SUB-Pay, the employer can further increase their separation savings by up to 45% or more while the employees still receive benefits that equal their pre-layoff wage.
Allows Employees to Receive More Benefits, Longer
Because of the savings that an employer receives with a SUB-Pay Plan, a company may decided to reinvest a portion of the savings back into the plan and extend the number of benefit weeks offered to their separated employees, while still lowering their separation plan costs.
This approach allows a company to continue offering “extended” SUB-Pay benefits to those who have been less fortunate in obtaining new employment.
Provides Compassionate Care for Employees
TMS understands that when a client goes through a reduction in force many of their separated employees may have feelings of anxiety and stress due to the job loss.
The key to minimizing issues and having a successful SUB-Pay program is to make sure that the right process is in place, the plan is communicated effectively, and most importantly, to make sure that the former employees are well-cared for after separation. TMS takes care of all these requirements for our clients’ participants.