When it’s time to trim payroll, a $25,000 payout can feel like a generous, clean exit. That’s one of the things Kristi Noem, head of the Department of Homeland Security (DHS), is offering employees in exchange for their resignations.
If you’re thinking of reducing your headcount, you need to know what that $25,000 (or any dollar figure) payout really means for your employees. If you’re not transparent about the true value of that offer, you may be buying short-term silence and long-term resentment.
That Big Severance Check? It’s Not So Big
This type of lump sum payout may seem like a great idea for employees when you need to cut headcount, and certainly, people will jump on it. Having a large influx of cash can help people do things they’ve been putting off—like paying off credit cards or getting a new air conditioner before summer hits.
But here’s what too few employers make clear: that $25,000 is before the IRS, FICA, and the state get their share.
To keep reading, click here: DHS Wants Workers to Quit. The $25,000 Buyout Has Hidden Costs