What Is Severance Pay?
Severance pay is money an employer pays certain employees after they have been fired, laid off or otherwise terminated. It is intended to soften the blow of losing their job. Policies and practices vary greatly from one employer to the next, but most employers pay severance only to employees who have lost their jobs because their position was eliminated or who were laid off as part of a mass layoff or reduction in force. In some workplaces, certain employees also are eligible to receive severance when they retire.
Am I Entitled to Severance Pay?
Employers are not required to have severance plans. However, if an employer does have a policy, it must pay any employee who meets its requirements. Often, this can include having worked for a company for at least a particular period number of years and losing your job through no fault of your own. It also can include many other requirements such as staying with the company through a transition period such as until a merger has been completed or until you have finished training your replacement.
In addition to severance policies and plans, an employer must pay you severance if you meet the requirements to receive severance under your individual employment contract. While most employees do not have employment contracts, let alone severance provisions in them, it is not unusual for top executives and managers to negotiate termination pay provisions into their contracts.
Have an Employment Lawyer Review Your Severance Package
Severance agreements almost always require you to sign away important legal rights before you can receive payments. As a result, before you decide whether to accept an offer it is important to have an experienced employment lawyer review it and to make sure you completely understand it.
How Much Severance Am I Entitled to Receive?
If you are entitled to receive termination pay, the amount you will receive is based on your employer’s policy or practice. For example, some employers offer one or two weeks of pay for each year you have worked for them. Other employers decide how much to pay each employee on a discretionary basis, meaning they make an individual decision for each employee.
Negotiating a Better Severance Package
If you are negotiating a new employment agreement, you might be able to include a severance provision in the contract. Likewise, if you already have lost your job and were offered severance pay, it might be possible for an experienced employment law attorney to negotiate a better termination package for you. For example, with the help of an employment lawyer it might be possible to negotiate more money, or to eliminate a problematic provision such as a non-compete clause. It even might be possible to add advantageous provisions, like the employer agreeing to pay your severance in a lump sum rather than over time, or to provide you a neutral or positive job reference.
Convincing Your Employer to Offer You Severance
Even if your employer has not offered you any severance pay, it still might be possible for an employment law attorney to negotiate a package on your behalf. This is especially true if you have a legal claim, such as if you experienced discrimination or retaliation, or if you were otherwise wrongfully discharged. However, sometimes employers will pay severance to employees who do not have legal claims, especially if they worked for the employer for a long time or the decision to fire them was particularly unfair.
Hire an Experienced Attorney
If you would like help negotiating a severance package before you are hired or after you have been laid off, or if you need help understanding the offer you received in New Jersey or New York, we can help. Please feel free to call us at (973) 744-4000 to schedule a meeting with one of our employment lawyers today.