Severance packages are outdated. While many companies continue to rely on these traditional methods to manage layoffs, they often fall short in providing long-term benefits for both the employer and the employee. Enter Supplemental Unemployment Benefits (SUB), a modern solution that’s changing the game.
SUB is a benefit designed to supplement state unemployment benefits, providing laid-off employees with a weekly payment that’s tied to the amount of unemployment they receive. Unlike traditional severance, SUB payments are structured to extend until the employee finds new work, creating a smoother and more financially secure transition.
Here are five reasons why SUB is the game-changing solution to your business needs.
SUB plans work in conjunction with state unemployment benefits, meaning that the amount an employee is eligible to receive from the state directly impacts the SUB payment they receive from the company. This setup ensures that employees have consistent, ongoing support throughout their transition. Additionally, the fact that SUB payments are linked to state unemployment means that they are less costly for employers than traditional severance, typically reducing severance costs by up to 50%.
One of the standout benefits of SUB plans is that they are not subject to payroll taxes. Unlike severance, which is taxed as income, SUB payments are classified as benefits, making them a tax-advantaged option for both employers and employees. Employers save on payroll taxes, and employees get more out of their benefits without the immediate tax burden.
SUB plans provide a more personalized approach to layoffs. Instead of a one-size-fits-all severance package, SUB offers weekly payments based on the employee’s eligibility for state unemployment benefits. This ensures that the benefits provided are more aligned with the employee’s specific circumstances, offering a smoother transition.
Employees facing layoffs appreciate the thoughtfulness and stability that SUB plans offer. Rather than a lump-sum payout that might be spent quickly, SUB payments continue over time, providing steady support. This can help ease the emotional and financial burden of job loss, showing your company’s commitment to its workforce even during difficult times.
Transitioning to a SUB plan doesn’t need to be complex. Working with a third-party administrator like Transition Services, Inc. (TSI) ensures that the entire process is seamless, from enrolling employees to managing state-specific regulations. With the right partner, you can implement SUB quickly and efficiently, without adding unnecessary strain to your HR team.
Make the Switch Today
It’s time to rethink how your organization handles layoffs. SUB isn’t just a cost-saving tool—it’s a way to provide real, lasting support to your employees when they need it most. By switching to SUB, you’re not just offering a benefit; you’re creating a culture of care that lasts long after the final paycheck is handed out. Ready to make the switch? Let’s talk about how SUB can transform your employee transition strategy.