Google announced on Friday that it plans to lay off 12,000 workers, citing a difficult economic environment as a reason for the downsizing. The company’s CEO, Sundar Pichai, informed staff of the decision in an email sent on the same day. The layoffs will begin immediately in the United States, while the process will take longer in other countries due to local laws and practices.
Google’s move follows the recent trend of other major US tech companies, which have been cutting jobs in response to concerns about a potential recession. Reports have suggested that employees at Google were anticipating layoffs, as they saw changes to the company’s performance ratings system and watched their counterparts at other tech firms lose their jobs.
In the United States, Google will offer affected employees 16 weeks of severance pay, plus an additional two weeks for each year worked at the company. After the news broke, Google’s shares rose by over 5%.
Tech firms are currently facing a variety of challenges, including rising interest rates and inflation, which have hit technology shares and caused advertisers to reduce online ad spending. The recent hikes in interest rates by the US Federal Reserve have made American tech shares less appealing to investors, adding pressure on these companies to reduce their workforces in response to the difficult macroeconomic climate.
What is Severance package?
A severance package is a compensation package that is offered by an employer to an employee who is laid off or terminated.
It typically includes financial benefits such as a lump sum payment, continued health insurance coverage, and outplacement services to help the employee find a new job. The specific components and amount of a severance package can vary depending on the employer’s policies, the employee’s length of service, and the circumstances surrounding the termination.
Historically, which all companies paid severance package to its employees?
Severance packages have been offered by many companies across various industries, but historically, not all companies have offered them.
The practice of offering severance packages became more common in the mid-20th century, and it has been more prevalent in some industries than others.
For example, large corporations, especially in finance and technology, have been more likely to offer severance packages to their employees, while small businesses and startups may not have the resources to do so. However, it’s important to note that the specific policies regarding severance packages can vary widely even within the same industry or company.
Why company should pay severance packages ?
Companies may choose to pay severance packages to employees for a variety of reasons. Here are a few:
- Legal compliance: Depending on local labor laws, companies may be required to offer severance pay to employees who are laid off or terminated without cause.
- Employee retention: Offering a severance package can help maintain good relations with departing employees, which can be important for preserving the company’s reputation and preventing negative feedback or litigation.
- Morale: Providing a fair and reasonable severance package can help mitigate the negative effects of a layoff or termination on the remaining employees, who may feel more secure in their positions and less resentful toward the company.
- Transition assistance: A severance package can include outplacement services or job search support, which can help the employee find a new job more quickly, which benefits both the employee and the company.
- Contractual obligation: Some employment contracts may stipulate that the employer must offer a certain level of severance pay in the event of a layoff or termination.
Can employee take legal actions against employer for not giving pay severance packages?
In some cases, an employee may be able to take legal action against an employer for not providing a promised severance package or for failing to provide severance pay when required by law.
The ability of an employee to take legal action will depend on the specific circumstances, including local labor laws, any employment agreements or contracts in place, and the reason for the termination or layoff.
If an employer has promised a severance package in writing or through a verbal agreement and then fails to provide it, the employee may be able to pursue legal action for breach of contract. Additionally, if local labor laws require severance pay under certain circumstances, such as mass layoffs, an employee may be able to pursue legal action to ensure that their rights are protected.
It’s important to note that the legal process can be complex and time-consuming, and it may be beneficial for the employee to consult with a lawyer or other legal expert before pursuing legal action.
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