What is a company buyout?

Buyout packages can range from two weeks’ pay plus another paid week for every year worked to hundreds of thousands of dollars that some auto companies have paid their union workers to leave. In some cases they can also include benefits such as extended health care insurance and or job search assistance.

Buyout offers are usually made to non-critical staff, but not always. Senior-ranking employees who are close to retirement or cost the company more money than a new-hire would are also common targets. But then again in today’s world just about anyone can find themselves on these buyout lists for various reasons.

 

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How to review your buyout

It is important to review your buyout offer carefully and weigh that offer against your desired retirement lifestyle. Below is a list of some considerations you may want to take into account to help you make this very important decision.

  • How close are you to retirement? …and will taking this buyout enable your to retire early without the worry of running out of money in retirement?
  • Which is more beneficial for you, taking the company pension/annuity or taking the lump sum cash balance?
  • Will taking this buyout set you up better for retirement or worse?
  • What happens to any of your personal leave you have stored up?
  • Are there any bonuses or other company perks being offered in this buyout?

Release from liability agreement

In return for taking a company buyout package, employees are required to sign a release from liability. This agreement between you and your employer states that the company will not be sued or held responsible by you for the decisions you make in taking the buyout package.

The release from liability is often not so easy to spot but please know the importance of this document. Below is a list of some of the more common names I have seen:

  • Waiver of all Claims
  • Hold Harmless Agreement
  • Indemnification Agreement

The bottom line is that the employee agrees not to sue the company in return for the buyout package they have agreed to take.