Employees Not Happy With International Business Machines Corp. (NYSE:IBM)


International Business Machines Corp. (NYSE:IBM) has changed its severance package regulations in a tactic that may save cash but also change the thought process of any employee planning to retire early in the future. Earlier when IBM offered early retirement, the severance amounted for up to six months’ pay. Currently, IBM brought it down to only a one month’s pay. The latest severance package alterations were made available in a January 2016’s update.

Here is an extract from the IBM document that enunciates terms of the IBM Severance Allowance Plan (ISAP).

The separation allowance payment as per the individual separation allowance Plan irrespective of the circumstances under which ISAP is provided is a payment for a month.

For personnel coming under the company’s growth driven profit sharing program or any program offered in place of the former, one month salary is paid at the ISAP. It’s paid as lump-sum considering the retiring individual’s base salary amount.

A severance allowance payment made under any of the company’s severance plan is in place of any other form of separation payment to which the employee might, is or may have become entitled to. However, a retiring individual is not automatically entitled to severance allowance, and it will not be released for reasons other than those that are listed above. In case, the employee has debts outstanding to IBM, no separation allowance occurring under any of IBM’s plan will accrue.

However, if the outstanding debts are repaid by an employee, a severance allowance would be paid in full. Indebtedness to the company could be a debit balance, not returning the IBM-owned property, an outstanding travel expense account, unpaid tax loan, credit card debt and an outstanding balance on an installment-based purchase of an IBM product or an IBM US mobility plan equity loan.

In case of re-recruitment by the company or any of its subsidiaries as a regular employee within 30 days of the termination of the employment, IBM has the right to demand repayment of the entire ISAP payment.

It’s not clear why the severance plan changes were made but it’s clearly not welcomed by the existing IBM personnel.