Unemployment insurance doesn't work like you think it does, at least in the states I've run companies in.

He could be 100% liable for unemployment benefits made against his company in the form of increased benefit charges.

Here's a quote from Georgia's handbook:

"Experience rating is a system which relates employer taxes to the cost of providing unemployment benefits to its employees. Lower rates are earned by employers whose unemployment experience costs are less, and higher rates are assigned to employers whose experience indicates greater costs.

"Under experience rating, benefits paid are charged to the claimant's separating/most recent employer, provided the employer has paid wages of at least 10 times the claimant's weekly benefit amount and the separation was under allowable conditions as defined by the Employment Security Law. The employer most directly related to the claimant's unemployment will be charged for benefits paid and thus reflect a true experience rating. This system helps to maintain an adequate reserve fund from which future benefit payments will be made.

"No employer's account will be charged more than the amount of wages that employer paid the claimant and the employer will pay only for the period of unemployment attributable to the separation from his employ."

Employers directly pay for state unemployment benefits; it does not come from the public tax pool.

If I am getting rid of someone, it's usually for cause. However, if I terminate someone, then they can file for benefits, then I have to fight to say that the employee was fired for cause, prove my case, yada yada yada. It's much more time efficient for me if the employee just resigns, as all I have to show is the resignation letter.

Unemployment insurance is paid for by employers, and the more former employees that collect unemployment, the higher the employer's unemployment insurance premiums. I save a ton of money by making sure my former employees do not get unemployment benefits. This is also why a resignation is important, in that it gives me assurance my premiums won't rise.

I haven't had to let anyone go simply because I didn't have enough work for them, so I can't say I've screwed anyone out of unemployment benefits. I'm just making sure my costs stay down when I do need to get rid of someone. However, this is also why companies may offer severance. They can either pay increased unemployment insurance premiums to the government, or they can win goodwill from employees by giving them some cash and also releasing the employer from some additional liabilities.

I guess he has to pay for those benefits on the payroll tax, although it is horrific, no doubt about it.