The prospect of layoffs and ongoing downsizing in governments due to budget cuts has generated growing concern about termination benefits for public employees, such as severance pay, transition assistance, and advance notice. This study analyzes the organizational reasons why governments should provide such benefits. The study also uses advance notice as an example, and the CPS-Displaced Worker Survey to assess whether such a benefit lessens the economic loss of layoffs for affected employees. The findings show that termination benefits are integral parts of organizational commitment to preserve a long-term relationship between the organization and its employees, and serve the purpose of maintaining and reinforcing the organizational commitment and productivity of employees, especially those who survived. The findings from the case study show that advance notice provides terminated employees an early start in their job search and therefore helps lessen their economic loss resulting from layoffs. The study also discusses the implications of mandating governments to provide termination benefits as a strategy for managing workforce reductions.
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