When To Consider Implementing a SUB Plan

Posted by Lana Mellis on Apr 3, 2018 1:14:48 PM

Transitioning to a Supplemental Unemployment Benefits plan is a big decision, and is not something which can be done overnight. The implementation process takes careful planning and a keen eye to ensure your employees receive the most effective benefits in their transition from the company. Outlined below are the main scenarios when you might want to consider incorporating a SUB plan with your process.

If you have a layoff planned

If you have a layoff planned, it might be the perfect time to implement a SUB Plan. The released employee’s weekly income and the number of benefit weeks awarded remain the same as under your current Severance Plan. There are two differences for employees:

  1. Their payments are no longer subject to employment tax withholding, so their take home pay is slightly increased.
  2. They will receive payments from two sources - State UI and the former employer, . A third party SUB Plan administrator like Transition Services integrates the employer-paid separation payments with State UI and seamlessly processes SUB Pay for released employees, keeping them whole during their unemployment period. Meanwhile, the employer sees cost savings of 25-45%, potentially millions of dollars, compared to traditional severance. Implementation can be completed quickly and effectively, and the Plan can be customized to fit your company’s needs.

If you don’t have a layoff planned

A neutral time is the easiest time to evaluate your severance plan and consider moving to a SUB Plan. A flexible timeline allows organizations ample time to perform a cost-savings analysis based on actual data, design the Plan structure to best fit the values and goals of the Company, and to establish the operational processes to ensure smooth processing. The beginning of the next fiscal year benefit period is a common launch date although the Plan can go live at any point during the year.

If you are in the middle of a layoff

While now may not be an ideal time to make changes to your severance Plan,  it’s important to consider the future cost savings available through a SUB Plan. If your organization performs any regular restructuring, has a workforce that expands and contracts based on project activity or client changes, or has M&A as a component of its operating strategy, a SUB Plan offers significant operating efficiencies and year after year. Once a Supplemental Unemployment Benefits Plan is in place, the employee receives a slight bump in income while unemployed and support services in obtaining new work, while the employer reaps the rewards of having an efficient and effective benefit program in place.

Providing the most fair benefits for employees is always something to consider, whether you are looking at layoffs in the future, or currently in the process of transitioning employees from the company. Your employees will thank you for having their best interests at heart, and you can rest easy knowing you’ve supported the best possible outcome as an employee transitions out.


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Tags: Benefits