How to Evaluate an Employee Buyout Package

An employee buyout package is an early retirement package that is offered to employees in return for them leaving their jobs. For some people who are offered buyout packages, it can be an emotional blow if they had no intention of leaving their jobs. If you're offered a package, you'll be faced with the difficult task of determining if you should take the buyout or if you should stick with the company.

Evaluating an employee buyout package

Here is some basic information you will need to take into account when evaluating an employee buyout package.

Make an informed decision

Figuring out the financial details of a buyout package can be difficult, even if it's an easy decision to leave your employer. It is important to consider how secure your job will be if you decide to stay, and you should consider that you may suffer from a future layoff, where a lesser severance package is offered.

Your age is a factor in evaluating the buyout as well. If you are too young for retirement, the severance will be your source of income while you find another job; if you are already considering retirement within a few years, this may give you the opportunity to start that phase of your life.

In most companies, you will have 45 days or another specified amount of time to consider the buyout. You will want to utilize all of this time to complete all research required for such an important decision. It is important to consider that, by signing the agreement, you give up any right to file any other work-related claims or issues against your employer.

Ask if an employer can provide an even better employee buyout package

Ask in writing if an improved buyout package can be brought to the table. The employer may not have an obligation to inform workers about a pending better deal unless asked. Ask to be informed of any changes to the buyout package; you want the best deal available. Be sure to get all responses in writing.

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Find out where your benefits stand

Find out if continued health benefits will be included in the package for you and your family. If health coverage is not included, negotiate it to be part of the deal. Remember that deals aren't set in stone and health insurance is very expensive and important.

For lump-sum payments, consider the taxes that will be applied; a buyout is taxable income. If the payout will place you into a higher tax bracket, consider negotiating payout plans with your employer to avoid high taxes.

You will want to use vacation and sick leave before you leave or have it included in your buyout package.

Additional ideas when considering a buyout package

Retirement benefits: Find out what your employer plans to do with your retirement benefits.

Support system: Make sure that you have the support of your family and friends. You will need this for morale-building during future job search attempts.

Watch your money: Create a budget and cut out any unnecessary expenses.

Extra services: Take advantage of any extra services your employer may offer to those who accept the buyout. Sometimes employers will offer career planning fairs and seminars.

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