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What to do when rehiring a former employee

Updated: April 1, 2011 - 1:35 pm

Posted: April 1, 2011

Companies rehire alumni employees because it is beneficial in multifaceted ways.

Cost savings occur in orientation savings and reduced hours spent on training and recruiting overhead.

Some large corporations have created "alumni" recruiting websites to keep up with ex-employees and use their connections. They use ex-employees' continued loyalty to the corporation to recruit new hires or rehire employees who may now have valuable new skill sets or experience. This benefits not only the company, but also the rehire.

For example, a seamless benefits reinstatement - if the alumnus has been gone for only a short period.

Savings for HR results in a reduced need for background checks. The alumni employee has already been researched. Or, the time period between termination and rehire was so short, a new background check is duplicative. There may be no referrals to call because the alumni's tenure with the company speaks for itself. Fewer work hours are spent on a recruiter's full life-cycle of tasks normally required.

The cost of training is minimized, unless the alumnus has missed major changes to policies, markets, products or services. Many rehires can simply pick up where they were. Unless the alumnus is placed in a new job or department, there is no need to re-train them on most corporate policies or techniques.

The IT department minimizes overhead costs by reactivating e-mail addresses, access to servers or employee portal, or previous permissions for tasking.

When alumni employees return, whether for an old job or a different position in a new department or geographic area, their initial expectations may be that everything will be the status quo from before.

If the rehire has been gone more than a month, changes may have occurred as part of a company's cost-cutting and streamlining, of which the alumni needs to be aware before they sign the rehire offer of employment.

It is vital that human resources or the rehiring manager communicate changes, expectations and any variation of benefits to the rehire, either during the final interview or within the rehire offer letter.

Offer letters have an annual salary noted, but many companies don't detail benefits, except to note entitlements to benefits provided to all full-time and/or designated benefits for part-time workers. If there has been an open enrollment period, then co-payments, premium costs or provided benefits may have changed and need to be communicated.

Rehired employees usually slip through the communication cracks in the HR department, so alumni have the onus to inquire.

If the employee has been absent for less than 30 days, the employer might be able to re-instate the alumnus or "make whole" without a lot of paperwork.

The insurance vendor might not yet have been notified the employee has left.

If the employee has been gone for more than 30 days and enrolled for COBRA, they should have received information about changes in the benefits coverage. If there is no break in insurance, there should be 100 percent coverage when they reconvert the employee back to the same plan.

If the rehire did not elect COBRA benefits and there is a gap of coverage over 30 days, the employee will be considered a new employee and will most likely have to make elections as a new hire. This might be to the benefit of the rehire if they don't have to worry about pre-existing conditions, but may result in a waiting period if there are pre-existing conditions not covered by the recent health care act.

Rehired alumni may be able to negotiate a higher baseline salary, but the company could offer the same salary because they are still struggling.

If an alumnus is offered a lower salary, he should remind the employer the cost of a rehire will be drastically reduced compared to a new hire, based on less orientation, retraining and background checks needed by a recruiter. This provides a modicum of power to negotiate a higher salary or reinstatement to the status quo.

The employer may wish to consider offering stock options and vesting stock. They may not be able to offer a higher salary, but may have the ability to offer future incentives via investment. The stock may eventually exceed the "lost" value of the higher or status quo salary. The alumni takes the gamble the company's worth will increase when the economy gets better, there is a gain in sales for a new product or service, or even a back-burner R&D project starts to produce. The bet might even revolve around the alumnus' ability to increase sales.

Employees expect vacation - paid time off - and possibly sick leave - if separate from PTO accrual - as part of their benefits rehire package. Employees absent for a short-term period will want their accrual rate reinstated - especially if it was at a higher rate than new hires.

Employees earning three, four or five weeks of vacation annually will want that reinstated or grandfathered in. This should be discussed in the final interview, and written into the offer of rehire, so there is no misinterpretation.

If the company is struggling financially, or the alumnus has been gone for several years, HR may insist the rehire restart the paid time off accrual rate from the baseline.

Employees love extra benefits offered by employers such as tuition reimbursement or training cost reimbursement. The company may have tenure restrictions for these benefits, so the alumnus needs to ask for any restrictions to be lifted as part of the rehire offer. This will "make whole" benefits attained before the employee left.

Many rehired employees have the capacity to negotiate from a point of strength with employers who wish to rehire them. Smart job seekers can regain benefits, higher salaries and other tenured perks, if the company has the financial capacity.

No company is legally obligated to provide the grandfathering of benefits, privileges or perks. But offering these in small or incremental amounts could be a deciding factor to hiring back a special skills or unique employee who can give the company an edge against the competition.

Alumnus should get everything negotiated in the final interview for an offer-of-employment letter so there is no misunderstanding once onboard.

Dawn Boyer is the owner of D. Boyer Consulting (http://dboyerconsulting.com), a human resources consulting firm for small business and 8(a) government contracting companies. She can be reached at Dawn.Boyer@me.com.

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