severance policy

No matter what the circumstances, leaving a job can be stressful. If you are laid off or fired, the prospect of seeking new employment without having a paying job can be frightening. When you retire, not knowing what your financial future holds may cause anxiety. And even if you’re leaving to take another job, there is usually a period of a few months before you can take advantage of that job’s benefits.

A severance package can help see you through such uncertain times. But not every employee is entitled to one. Here’s what you need to know about severance packages and how to make the most of them.

Am I Guaranteed a Severance Package?

There is no law mandating that companies have to provide severance packages to their employees. The only thing that is provided for by law is the opportunity to temporarily continue your health insurance at your own cost. But many companies do offer severance packages under certain circumstances.

The details of your company’s severance policy may be found in your employee manual, or in your employment contract. It is important to review these things before taking a job. If your severance package is detailed in your contract, you can negotiate for what you want before signing. The company doesn’t have to change anything, but if they are really interested in hiring you, they may be willing to make some concessions.

In most cases, companies only provide severance packages for employees who are laid off or retire. But firms may choose to offer severance benefits to employees who resign with notice, or in some cases even those who are fired. These situations are often considered on a case-by-case basis, and the employee may hire a lawyer to help negotiate benefits.

What’s Included in a Severance Package?

Severance packages vary significantly. But in most situations, the benefits provided are based on the benefits one received as an employee. These may include the following:

* A payment based on the length of service. This payment is often equal to 1 to 2 weeks of pay for each year of service for hourly and salaried employees, up to a maximum of 26 weeks. For executives, it may be 6 to 12 months’ pay.

* Payment for accrued vacation time. Some firms also offer payment for unused sick leave.

* Insurance benefits. These may include medical, dental and life insurance.

* Retirement benefits and stock options. These may be continued just as they were while the individual was still an employee.

* Help finding a new job. This is typically provided for employees who have been laid off.

Severance packages are a way of saying “thanks” for an employee’s service. But they can benefit the company as well. As a condition of accepting a severance package, employees must usually agree not to pursue legal action against the former employer or attempt to collect unemployment benefits. They may also have to agree not to go to work for a competing company.

A good severance package can help ease the transition from your old job. If you feel that you’re not getting a fair shake, and employment attorney may be able to help you get the pay and benefits you deserve.