What Is Severance Pay?

Severance pay is money a company pays to certain employees after they have been laid off or otherwise terminated.  Severance is intended to soften the blow of losing your job.  Severance policies vary greatly from one company to the next, but most severance plans only apply to employees who lose their jobs because of a job elimination or as part of a mass layoff or reduction in force.

Am I Entitled to Severance Pay?

Employers are not required to have severance policies.  However, if a company does have a severance plan, it must pay severance to any employee who meets the requirements to receive severance.  Similarly, your company must pay you severance if you meet the requirements to receive severance under your individual employment contract.

Have an Employment Lawyer Review Your Severance Package

Severance agreements almost always require you to sign away important legal rights before you can receive the severance payments.  As a result, it is almost always important to have an employment lawyer review your severance offer, and make sure you completely understand it before you decide whether to accept it.

Negotiating a Better Severance Package

If you have been offered severance, it might be possible for an experienced employment lawyer to negotiate a better severance package for you.  For example, a lawyer might be possible to negotiate more money, or eliminate a problematic provision like a non-compete clause.  It even might be possible to add helpful provisions, like having the severance paid in a lump sum, or a requiring the company to give you a better job reference.

Convincing Your Employer to Offer You Severance

Even if your company did not offer you any severance pay, it still might be possible for an employment law attorney to negotiate a severance package for you.  This is especially true if you have a legal claim, such as if you experienced employment discrimination, retaliation, or were otherwise wrongfully terminated.  However, sometimes companies will pay severance pay to employees who do not have legal claims, especially if you worked for the company for a long time, or the decision to fire you was particularly unfair.