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A Beginners Guide To Severance Package

Updated : August 4th, 2020

Millions of Americans have lost their jobs due to the Coronavirus-induced economic shutdown. As tough it is to lose a job, people are now finding it difficult to collect their deserved severance package. While some workers are receiving severance pay for fewer weeks than expected, many others are getting the payment based on their base wage and not the total income. 

Here, we will walk through what an employee can do if he/she does not get the expected pay. But before that, let’s have a quick look at what a severance package and how it works. 

What Is A Severance Package?

Severance pay is a kind of payment or series of payments given to an employee when he/she is laid off or fired. The payment may also include the continuation of the health-care benefits for a certain period. 

Who Can Get Severance Pay?

Employees who have quit their job voluntarily do not qualify for a severance package but are given to those who have been fired. However, there are certain exceptions. If an employee is underperforming and the employer prefer to lay off, then the employee may not qualify for the severance package, provided the employee was given sufficient chances to improve the performance. 

The law does not require severance pay unless the employee has an employment contract that requires the payment. However, under the federal Worker Adjustment and Training Notification (W.A.R.N) act, employees may get some protection.  

If the company has 100+ employees and is preparing to fire many people, the employer, as per the law, is required to give the workers a 60 days notice of a large departmental closing or company closing. If the employer fails to give the notice, then the employees are legally entitled to a severance package. 

Can You Negotiate Severance Package?

Employees can usually negotiate severance pay. However, when negotiating for more, it is a must for employees to consider the factors that may sway the organization in their favor. 

For instance, if the manager caused the employee to turn down a job at a different company, the employee can ask for an increase in the severance as he/she is left unemployed due to his/her loyalty to the company. 

Note that the severance pay can only be negotiated for more than a higher payout. The employee can negotiate and ask payment for unused sick days and vacation.

How Much Severance Pay Does An Employee Receive?

Severance amounts vary with companies. Usually, companies calculate the amount based on the total salary and the duration an employee has worked. 

For instance, an employer might offer severance pay for 2 weeks’ salary for every year. So if the employee has worked for 3 years, the employer may offer 6 weeks of salary. 

What To Do If An Employer Is Not Giving A Severance Package?

As said earlier, a severance package is not required by law, and hence, a company can deny the payment. However, if there exists an employment contract that states the employee is entitled to the payment, the company must pay the employee, failing to which the employee can argue that he/she is entitled to the payment.   

Second, if the employee and employer have signed a severance agreement, release, or separation agreement, and the employer fails to pay, the employee can go to court.

Is Severance Pay Taxable?

Severance pay is considered as income and hence is subject to taxes. The amount taxed, however, depends on how much the employee receives.

Final Words 

Severance pay is a goodwill act that provides employees with buffer time between working and unemployment. It may also safeguard employers from lawsuits and give them a competitive edge in the market. 


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  1. I lived in ga in 2019 and move to florida in 2020 and work for the xmas months in nov-dec. I was told to do a combine wage claim. my question is which state do i file the claim in?

  2. I filed for pua in Ohio back in October 2020.My claim has been in ajudacatuon since 11/1/20.So 2 to 6 weeks is a total understatement! When I call.i am told to basically hurry up and wait some more.I have recently been redetermined and my claim is allowed.but I have one pending issue.How long is too long?

    1. Nicole,

      Unfortunately, nobody has an answer. There are perhaps thousands of pending applications. Please consider the option of visiting an office in the vicinity if safe and feasible.

  3. If you claim your weeks for unemployment and for the next 2 months you still have not received your money. Where can you go in volusia county to talk with a live person

  4. On NYS DOL website, my claim is saying current yet the information is for my old claim with 0 days remaining despite receiving 2 weeks of payments on the new claim and I was able to certify last night. I haven’t received anything; no letters or emails.

  5. I was disqualified for UI benefits for not providing an ID and other forms of identification. How do I fix this?

    1. Hi Mike, I’m in NYS and was at the end of my BYE on 3/14, I was still certifying but wasn’t getting paid. I found out I had to file a new claim because my other was exhausted. I’m still waiting on approval. Maybe you have to file a new claim. I hope this helps.

  6. They say 2-6 weeks it’s more accurate to say 2-6 months; and when you call many of them are rude and unwilling to assist!

  7. someone needs to look into Sharon L. Anton gillette, wyo. or dickinson, nd she is a fraud and has done so many fraudulent things and please look into her

    1. Annette,

      Please report it to the Fraud Division of the Unemployment Office in your state. You can report on the website.

  8. I worked part time for thee years here in florida. I’m currently not working. I’m also retired and collects social security.
    My question is
    Am I qualified to file for unemployment ?

    1. Ruby,

      To be eligible, you’re required to have sufficient hours and earnings. Please use the “Benefits Calculator” available on this website.

  9. So adjudication takes 8 to 12 weeks. Oh okay, that explains why I havent received payment since July. That surely helps just like the rest of the information that you give. And by the way. What’s the NEW reason you can’t get through to the Call Center.

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