​IBM alters severance terms

IBM has altered its severance package rules in a move that may save money, but also alter the thinking of anyone taking early retirement in the future.

special feature

IT Budgets 2016: A CIO's Guide

It's budget planning time for technology decision makers as they look ahead to next year and plan on where to focus their IT resources to make the biggest impact.

Read now

The severance package changes were contained in a January 2016 update. Previously when IBM offered early retirement the severance was a maximum of 6 months pay. Now severance is one month.

Here's the key excerpt from the IBM document obtained by ZDNet that outlines terms of the IBM Separation Allowance Plan:

The separation allowance payment available under the Individual Separation Allowance Plan, regardless of the circumstance under which ISAP is offered, is one month of pay.

For employees covered by IBM's Growth Driven Profit-sharing program or on any type of sales or services incentive plan or any special program which is offered in lieu of the IBM Growth Driven Profit-sharing program, the one month of pay made under ISAP is paid in a lump sum, using the employee's base pay amount (also known as reference salary)

(full or part time).

Any separation allowance payment under any of IBM's plans is in lieu of any other form of separation pay to which the employee is, may, or might have become entitled. An individual separation allowance is not an automatic entitlement and will not accrue or be paid for reasons other than those listed above. No separation allowances under any of IBM's plans will accrue if an employee has outstanding indebtedness to IBM or debts for which IBM may be responsible.

However, if an employee makes arrangements satisfactory to IBM to repay any such outstanding debts, a separation allowance may be paid. Indebtedness to IBM could include, but is not limited to, a debit commission balance, an IBM US Mobility Plan equity loan, an unpaid balance on an installment purchase of an IBM product, credit card debt, excess tax loan, an outstanding travel expense account or failure to return IBM-owned property.

In the event of rehire by IBM or any of its subsidiaries as a regular employee within 30 days after separation of employment with a payment under the Plan, IBM reserves the right to require repayment of the full ISAP payment.

It's unclear what the severance plan changes mean. IBM traditionally has "rebalanced" its workforce early in the year. We reached out to IBM for comment, but didn't hear back.