Staff Reduction Timing: Impact on Unemployment Costs
Did you know that the timing of a staff reduction has a tremendous impact
on the unemployment cost of the reduction. In
some cases, the additional benefits paid in the current year will force a company
into the next higher tax bracket which, depending on the state and a company’s current
tax rate, could end up costing more than what is being saved in payroll dollars as
a result of the actual reduction.
Tax teams and Human Resource departments need to work closely together to determine
how decisions made related to a staff reduction will impact unemployment costs. Tax
rate projections should be prepared at each key decision point and with the final
plan to show the overall expected impact. While
having to implement a staff reduction is a difficult decision to make, there is much
that can be done to minimize the impact to both employer and exiting employee, at
least from an unemployment perspective.
This weblog is sponsored by TALX.
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