What is a Severance Package?

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While no law requires an employer to offer you a severance package, many employers do provide them when an employee is forced to leave his/her job. Severance packages often contain clauses in which you waive your right to sue your employer for wrongful termination, so it is important to be sure that what your employer is offering you is a good deal.

What Is Normally Included in a Severance Package?

Some severance packages are only a certain amount of pay (possibly one month¿s salary). More extensive severance packages contain more than just severance pay and are usually offered to longtime employees. These severance packages often include a variety of benefits, from severance pay to health insurance benefits. Things that are often included in a severance package are listed below.

Severance Pay
An employer will almost always provide some kind of severance pay if s/he offers a severance package at all. The amount of pay can vary greatly, but it is usually calculated based on how long you worked for the employer. For example, two weeks¿ salary for every year your worked.

Insurance Benefits
There are laws, both state and federal, that require your employer to offer you continued health insurance benefits when you leave your job (link to ¿Things You Should Know When Leaving Your Job¿ article). Under these laws, including the Consolidated Omnibus Budget Reconciliation Act (COBRA), you will have to pay the costs of coverage. Often times an employer will include paying the costs of continued insurance benefits for a specific period of time into a severance package.

A Promise to Not Contest Unemployment Claims
Depending on how you left your job and some other factors, you may be eligible to receive unemployment benefits. If you file a claim for them, your former employer will have a chance to contest your claim. It is possible to get a promise from your former employer to not contest your claim for unemployment benefits included in a severance package.

References
It is possible to work with your employer to come up with a letter of reference that you find satisfactory for you to use in seeking out other employment. This letter of reference can be included into your severance package.

Outplacement Services
Sometimes employers will provide you with services, such as career counseling and job training, to help you find a new job. These services are called outplacement services and can be offered as part of a severance package.

Circumstances Where You Have a Legal Right to a Severance Package

While no laws compel employers to provide severance packages, there may be times where you employer is obligated to provide you with one. An employer must provide a severance package if:

Do I Need a Lawyer to Determine whether a Severance Package Is a Good Deal?

If you are offered a severance package, an experienced employment lawyer can help you determine whether or not it is a good deal. Also, you may be in a position to negotiate your severance package with you employer (especially if you firing was questionable) and a consulting with one or more severance package lawyers with knowledge of employment law can assist you in dealing with your employer and getting the package you deserve.

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Last Modified: 12-31-2012 01:40 PM PST

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