Buyouts and early retirement plans are ways for employers to reduce their payroll costs by trimming employees without firing anyone. If you are offered a buyout or early retirement, you should understand enough about the subject to be able to decide whether the offer is worth it, and to know whether you are being treated fairly.
Buyouts and Early Retirement Packages Are Different
Although buyouts and early retirement packages are structured in a similar manner, there are important differences. Buyouts are typically offered to younger workers who will be seeking another job. Early retirement packages are typically offered to older workers who are nearing retirement age and might be willing to retire early. Under an early retirement package, for example, the employer may simply agree to start paying pension payments early.
Your Employer May Offer a Variety of Incentives
A buyout or early retirement package may include a lump sum payment or periodic payments for a set period of time. It may include your accumulated vacation pay and sick pay. A lump sum payment is more likely in a buyout than an early retirement plan. It may include health insurance for a limited period of time. It may also include employer stock or stock options. An early retirement package may offer to lower the minimum period of service required to be eligible for pension benefits - from 25 years to 22 years, for example.
You May Be Disqualified From Unemployment Benefits
If you quit your job voluntarily, you generally are not eligible for unemployment benefits. On the other hand, if you are willing to work but your employer lays you off for economic reasons, you usually are eligible. If you accept a buyout or an early retirement package, however, it may be difficult to determine whether or not you left voluntarily. If your employer tells you that you will be laid off if you refuse to accept a buyout, for example, you may be eligible for unemployment benefits. If your employer offers a buyout but doesn't tell you what will happen if you refuse it, the answer is less clear.
Federal Law Forbids Age Discrimination
The Age Discrimination in Employment Act prevents most employers from discriminating against you if you are over 40. You may have a claim against your employer for age discrimination if you are forced to take early retirement. You may also have a claim if your employer, without good reason, lays you off but offers younger workers a buyout. To accept a buyout or early retirement package, however, your employer may require you to sign away your right to sue your employer for age discrimination. You might want to consult with a lawyer before doing do.
An Employment Lawyer Can Help
The law surrounding buyouts and early retirement packages is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact an employment lawyer.