Accordingly, the handbook might simply indicate the existence of the severance pay plan and tell employees to refer to the SPD for the specific terms of the plan. The SPD could also be included at the back of the employee handbook itself, to make it readily accessible to employees. The severance pay policy handbook statement included at the end of this chapter could be placed in the handbook's benefits section or with the termination of employment policy. One of the most important exemptions for severance programs is the exemption available for small unfunded welfare plans. Moreover, plans are eligible for the exemption only if they have fewer than 100 participants at the beginning of the plan year.
Unfunded plans offer employees the lowest level of security.
The employer's ability to provide severance payments can be impaired at a time of financial strain, which is exactly when layoffs are most likely. The cost of providing severance payments would be charged against the employer's current earnings, sometimes delaying the savings the layoff is intended to accomplish.