Severance Questions FAQ

Chances are, if you are being laid off, you didn’t see it coming and you have a lot of questions about the severance package that is being offered to you. Many of those questions will depend on the circumstances of your departure, and the company who employs you. However, some of your concerns may be addressed below in the typical Frequently Asked Questions about severance packages.

Q: I was fired. Am I eligible for a severance package?

A:  If you were fired for cause, you are not likely to receive a severance package. If you were part of a larger layoff or fired for no apparent reason, you may be eligible to receive a severance package. Most companies are covered by the Employ At Will laws that allow them to fire employees at their discretion. There are some exceptions and exemptions, though, that may mean you should be offered some type of severance deal.

Q:  Am I exempt from the Employ At Will laws?

A:  If you are part of a union, or if you signed a contract at the beginning of your employment, you most likely are exempt from Employ At Will. That means that your employer must give a justifiable reason for firing you. Likewise, if your firing was illegal, due to discrimination or criminal activity, you are exempt from Employ At Will protection and may seek to file an unlawful termination suit or complaint.

Q:  Why am I being offered a severance package?

A:  Most employers offer employees severance packages in exchange for a waiver of your legal right to sue. Whether the company needs to protect themselves for financial reasons or wants to avoid litigation, they will offer employees an extra bonus in terms of severance pay and/or benefits. While this seems like a gift to you, you will be required to sign an agreement to not sue or sometimes to not compete down the road. All severance packages favor the employer and should be review carefully.

Q:  Should I sign my severance agreement right away, like HR suggests?

A:  No. You should never sign any legal document without giving it the proper review and consideration. Most companies will make you think that the offer will go away if you don’t sign immediately. This is a scare tactic designed to give you the least amount possible. In most cases, you have 21 days to consider and review your severance agreement. Many law firms offer special severance review packages that offer professional legal review for an affordable fee that falls well below the 21 day period.

Q:  How is my severance pay calculated?

A:  A typical formula for severance pay is to give hourly employees one week of pay per year they have worked for the company. For salaried employees, the standard is two weeks per year of service. Both instances typically cap at 26 weeks. The formula changes to a higher length of time for executives.

Q:  Is my severance pay negotiable?

A:  In some cases, your severance is set based upon contracts signed when you were hired. However, in other cases, you can negotiate better terms. Keep in mind that straight pay is not the only severance benefit. It may be in your best interest to negotiate other perks like extended healthcare, job placement services and other benefits to bolster your severance package.

Q:  Should I hire a Severance Lawyer?

A:  If any of your severance package terms seem confusing or possibly unfair, you should consider hiring an employment attorney to help you understand your entire severance package. Whether you choose to hire a lawyer for simple severance review, or if you go further and hire someone for more in-depth negotiation is up to you.

About Aimee Lancaster

Born and raised in New York Aimee works as a freelance author and contributes to multiple publications and blogs around the world.