Employers are reluctant to eliminate severance pay during tough times because the move might mar the company’s employment brand within the marketplace, according to a new survey by Mercer.

Since the recession, two-thirds of companies have had to reduce their workforces. Yet, 70% of employers with a severance policy do not plan to amend it as a result of the economic downturn, the HR consulting firm reports. One in four employers, however, does not have a severance policy.

The survey, conducted in April, examines corporations’ severance policies and workforce reduction measures. More than 400 mid-size and large employers responded to the survey.

About 75% of participants offer continuation of benefits to executives as part of their severance policy, compared to 65% for professional and technical employees and 61% for non-union and hourly workers. Additionally, 69% of companies provide outplacement services to executives as part of the deal, while 57% did the same for professional and technical employees and 49% for clerical workers.

Mercer found that the minimum period of payments for most executives is more than 12 weeks, while the maximum period of severance payments for the majority of employees is 26 weeks; with the exception of executives, which is one year.

“Although most companies have taken a variety of initiatives to trim workforce costs, their severance policies have remained unchanged,” says Steve Gross, global leader of Mercer’s broad-based performance and rewards consulting business. “A severance policy – and how well it’s implemented – contributes to maintaining positive relationships with employees that may return to the company some day and supports the company’s employment brand within the marketplace,” he adds.

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