GM Isn't Laying Off Staff -- but It's Asking Workers to Quit

What happened

General Motors (GM) is looking to reduce costs by asking employees to take a severance package and voluntarily leave the company instead of doing a round of layoffs, the company announced Thursday. The decision follows GM eliminating hundreds of salaried jobs earlier in March.

“By permanently bringing down structured costs, we can improve vehicle profitability and remain nimble in an increasingly competitive market,” a GM spokesperson said in a statement.

The voluntary severance program is offered to all U.S. salaried employees who have worked at the company for at least five years and global executives with at least two years of service, CNN has learned.

So what

GM recorded a record annual profit for 2022. In spite of that, the company is looking to reduce its costs by $2 billion over the next two years.

GM has 167,000 employees globally, with 124,000 in North America -- including more than 42,000 members of the United Auto Workers union.

"We're not planning layoffs. We are limiting our hiring to only the most strategically important roles and will use attrition to help manage overall headcount," GM CEO Mary Barra told investors earlier this month.

Now what

Many companies have announced plans to lay off staff, or have implemented layoffs, since the start of 2023. So the fact that GM isn't forcing workers to leave is a positive thing at a time when layoffs are starting to pick up.

The details of GM's voluntary severance package aren't yet public record, so it's hard to know exactly what benefits workers who leave voluntarily will receive. But job site Indeed reports that the typical severance agreement offers one to two weeks of pay for every year of employment. And voluntary severance agreements tend to be more generous than those offered upon termination.

So all told, GM employees who leave the company might receive a sum of money they can put into their savings accounts. They might also be entitled to extended health insurance coverage and compensation for accrued time off.

GM may not be the only company to ask workers to leave voluntarily this year. So if you wind up in a situation where your employer offers a voluntary separation, you may want to look into the details. If the payday is high enough, it could be worth it to take the money and use the opportunity to explore a new career path if that's something you've been thinking about.

That said, one thing you should know about a voluntary separation from your employer is that it may render you ineligible for unemployment benefits through your state. If you're getting a generous payout as part of your separation, that may not be an issue. But before you assume you'll be able to double dip, you may want to talk to an employment lawyer who's familiar with your state's rules.