Jumping ship? Better check the company’s past severance before lay-offs arrive

Tech workers should consider the historical payouts given during lay-offs before jumping ship at the next big salary they are ­offered.

The tech industry pays some of the highest salaries in Australia. It’s also prone to lay-offs.

Tech workers should consider the historical payouts given during lay-offs before jumping ship at the next big salary they are ­offered.

Otherwise they could find themselves drawing the short end of the stick should the tech downturn head in their direction. That’s the advice of Aaron McEwan, vice-president of research and advisory at Gartner.

Mr McEwan said the advice was particularly useful for those in roles that had historically faced cuts during a downturn.

“If you’re a tech worker and you’re looking at a job offer that is coming from a part of the tech sector likely to go straight to lay-offs during times of economic downturn or uncertainty, I think looking at previous or historical severance payouts is probably a good part of your natural due diligence,” he said.

Aaron McEwan, Gartner vice president of research and advisory.

Gartner is a research agency and consulting firm that monitors salaries among the reasons employees quit, and rates of ­attrition.

In the past, severance data has typically been harder to come by, but it was increasingly being reported by the media and gathered by young tech workers and posted online.

“It’s not typically the type of stuff that’s going to end up on [jobs website] Glassdoor, but it could be following these rounds of lay-offs that we’ve seen across the tech sector, particularly in the US,” he said. “You’re not really going to know what it is unless it’s in the contract you signed.”

The Australian last year revealed that severance payouts in the tech industry varied by as much as 13 weeks, with some staff given as little as the national minimum of four weeks’ pay.

In certain situations, workers who were in probation periods or had served less than one year receive no severance at all.

Mr McEwan said severance pay, and salary more broadly, had typically been a taboo topic. However, in recent years talk of pay disparity has become increasingly common and some companies have even begun to publish staff remuneration.

Severance payments in Australia in some cases vary as much as three months, adding extra pressure to find a new role. Picture: iStock

“When a worker is presented with a contract, that could be a reasonable time to raise that question. Severance, outside of what a company is legally obligated to provide, is at the discretion of the organisation,” he said. “I would encourage employees to read the fine print in contracts that they’re presented with so that they’re fully aware of what those severance conditions and policies look like.”

Asked about the types of jobs in tech that were most likely to be laid off, Mr McEwan pointed to the start-up sector. “Any organisation that’s reliant on capital funding and raising funds tends to find when the economy gets shaky, that’s when those funds dry up pretty quickly,” he said.

Mr McEwan said Gartner had watched what he described as a “false economy” developing in the market where companies were using higher salaries to ­attract talent amid the skills and labour shortage.

“Companies are throwing silly money at new employees who are less skilled and less experienced than existing employees,” he said. “What happens is you end up losing better skilled or experienced employees, so it creates a bit of a false economy.”