In response to COVID-19, many entities have reduced employee headcount to remain in business. As a result, it’s more important than ever to understand how to account for termination benefits. This includes carefully considering which types of benefits are being provided and the overall timing of recognizing those benefits, ensuring you are recording them in the appropriate period.
Below are key benefits to consider, both during employment and after, and how to account for them.
The Families First Coronavirus Response Act (FFCRA) established an emergency two week paid sick leave requirement. An employer now may be required to accrue sick leave if they make the sick payments vest. Vested rights are those for which the employer has an obligation to make payment even if an employee is terminated.
Benefits provided after employment ends require different accounting treatment. Consider the following:
When it comes times to terminate an employee, whether during or after the pandemic, be sure to carefully consider the termination benefits you are providing and how you are recording them to remain compliant with your financial reporting requirements.
Contact Tina Dzik at firstname.lastname@example.org or a member of your service team to discuss this topic further.
Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.
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