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Termination and Severance Pay Policy

March 09, 2008

The Termination and Severance Pay policy defines the various types of separations from the employ of the Company and the effect of separation on benefits and continuous service. It covers information on applicability, types of separation, severance pay, accrued vacation time/pay, insurance, and length of service, among other related topics.

Subject: Termination and Severance Pay Policy

Organization: Anonymous

Example of: Standard Policy

Policy Statement

This policy defines the various types of separations from the employ of the Company and the effect of separation on benefits and continuous service.

Applicability

This policy will apply to all full-time regular permanent employees. With the exception of the severance pay section, this policy will also apply to part-time temporary employees.

Types of Separations

A. Voluntary Termination occurs when the separation is initiated by the employee. The following are examples of voluntary terminations:

• Written or oral resignation.

• Absence from work for 3 consecutive working days without notifying the employee’s supervisor.

• Failure to report for work on recall from furlough on the date designated.

• Failure to return from an approved leave of absence at the expiration of the leave.

• Retirement.

B. Involuntary Termination occurs when the separation is not initiated by the employee. The following are examples of involuntary terminations:

1) Layoff for lack of work—when the Company reduces its work force for economic or other reasons.

2) Release without fault—when an employee, through no fault of his/her own, is unsuited for or incapable of performing work assigned and no appropriate change of assignment is available.

3) Discharge—when an employee who is suited for and capable of performing the work, is terminated for such reasons as inefficiency, absenteeism, and violation of rules of conduct set forth in the Employee Manual, including, but not limited to, habitual carelessness or recklessness, disorderly conduct, insubordination, theft, leaving work before quitting time without permission, falsification of records, sleeping on the job, and waste.

C. Death of the employee.

D. Disability—when, on the basis of medical evidence, an employee is totally and permanently disabled from performing his usual work assignment and thus is eligible for disability benefits.

4. Severance Pay

The Company will make severance payments described below to eligible employees whose employment by the Company or any of its divisions or subsidiaries is involuntarily terminated and who is not re-employed by the Company or any of its divisions or its subsidiaries or successors within 3 months of termination. No severance pay will be granted for separations which are the result of voluntary termination, discharge, or disability.

A. Full-time Hourly and Weekly Employees

In the event of layoff for lack of work, release without fault, or death of a full-time employee, the following severance pay schedule will be applicable:

1) Less than 1 year of continuous service—no severance pay.

2) At least 1 year but less than 5 years of continuous service—2 weeks’ severance pay.

3) At least 5 years but less than 10 years of continuous service—3 weeks’ severance pay.

4) 10 years or more of continuous service—4 weeks’ severance pay.

B. Full-time Salaried (Exempt) Employees

Severance pay will be determined by the Company president in conjunction with the corporate personnel director. In no event, however, will the severance pay be less than that specified in Section 4A for full-time hourly and weekly employees.

C. Part-time and Temporary Employees

No severance pay will be granted to part-time or temporary employees.

5. Accrued Vacation Pay

The vacation policy sets forth the circumstances under which accrued vacation pay is granted.

6. Group Insurance

A. Life, accident, and short- and long-term disability insurance is canceled as of the last day worked. B. Dental insurance is canceled the first of the month following the last day worked or any subsequent date the Company lists as the employee’s termination date.

C. Medical insurance may be continued by eligible employees under either the federal law known as COBRA or applicable state law. Employees are to be provided information regarding these rights by the personnel department.

7. Restoration of Length of Service

A. Laid-off Employee

A laid-off employee with more than 90 days but less than 7 years of full-time continuous service at the time of layoff and who is rehired by the Company or one of its subsidiaries within 1 year from the date of layoff will have his original service date restored. An employee who at the time of layoff had seven years or more of full-time continuous service and who is rehired within 2 years from the date of layoff will have his original service date restored.

B. Employee Released Without Fault

An employee released without fault with more than 90 days of full-time continuous service at the time of the release and who is rehired by the Company or one of its subsidiaries within 1 year from the date of release will have his original service date restored.

C. Discharged Employee and Voluntarily Terminated Employee

An employee who was discharged or voluntarily terminated his employment, and who is rehired, will not have any prior service restored. His date of rehire will become his service date. Computation of service, for pension purposes and the effect of breaks in service on pension rights, however, will be determined in accordance with the provisions of the Plan.


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