Severance Pay Be Offered
In some cases, employers aren’t legally required to offer severance pay when employees are laid off. However, many companies choose to do so as a way to defuse tension among affected workers and show they care about their reputation. It also can help to cushion the blow of losing a job by helping with transition costs until workers find new jobs.
The amount of severance pay offered can vary widely, depending on the size and industry of the employer. It might include a lump sum payment or an ongoing stream of payments, depending on the company’s policies. It can also include reimbursement for unused vacation time and other benefits. Moreover, a company might be obligated to cover the cost of COBRA health insurance coverage for a period of up to 18 months following an employee’s termination.
A severance pay package can be especially helpful to Federal workers, as it can be challenging to find another job quickly after leaving the government. However, it’s important for employees to carefully analyze the financial impact before accepting a severance package. For example, if the federal agency was contributing to the employees’ retirement account, taking a voluntary severance package could mean missing out on those contributions and stunting the growth of one’s future savings. It’s also essential to remember that a severance package is subject to taxation.
Can Severance Pay Be Offered For Volunteer Workers?
While some companies take a “take it or leave it” approach to severance packages, others are more open to negotiating the terms. An experienced attorney can help an individual negotiate the best possible severance package. A lawyer can also review the severance agreement to ensure it’s free of unfavorable clauses, such as non-compete or nondisclosure restrictions that can limit employment options after a worker is let go.
Severance payments may not make up for the psychological and financial blow of losing a job. Therefore, it’s vital that workers seek support from friends, family, professional networks and career coaches to help manage their emotions during a tough job loss. In addition, a severance agreement might require that a former employee sign a confidentiality and non-disparagement provision or promise to assist the company in defending against any legal claims. A skilled New York City severance pay lawyer can help ensure that any such provisions are narrowly drafted and not overbroad.
Lastly, an attorney can make sure that the severance agreement is in compliance with employment laws, including the WARN Act, which requires companies to give advance notice when they’re closing or doing mass layoffs. This will help avoid the risk of an ex-employee filing a lawsuit against the company. A severance agreement should not violate any federal or state laws regarding anti-retaliation, whistleblower protections or wrongful termination. If a severance agreement does violate any employment law statutes, an employee may be entitled to additional compensation. NerdWallet is here to help you navigate the world of finances.
