Severance Pay Basics
1. You probably do not have a legal right to any severance pay. In the United States, severance pay is not required. In rare cases, an employee may have an employment contract that provides the right to severance pay or some companies have written severance pay policies that can give rise to the right to severance pay - but this is the rare case. Most people have no legal right to severance pay.
2. Companies offer severance pay packages because they want to make the transition smooth for themselves. The company will require you to give up all of your rights in exchange for the severance package. The company essentially wants to make sure that you will not cause trouble and it will pay you to leave quitely.
3. Most people only care about one thing - money. Many companies today have firm policies against increasing severance pay offers. But, sometimes companies will enhance the severance pay if you can demonstrate that you have a strong legal claim. For example, if you have a strong age discrimination case the company may increase the offer to avoid suit. But you will need to make your case. If you think that you have a solid discrimination case, you are probably better off contacting a good employment lawyer to help you negotiate. You can call us or find other good employment law firms in your area at www.nela.org.
4. There is no standard severance pay scale or forumula. Companies are fee to pay no severance at all or any amount that they desire. Typicall higher ranking employees receive larger pay outs. Often severance pay is based on an employees years of service with the company. But there are no rules governing severance pay. Some companies have published severance pay guidelines or policies and if your company has such a policy, then you should review them and make sure you are getting the required amount.
5. Some companies include non-competition agreements in the severance pay agreements. Be careful if one of these is in your agreement. These non-competition agreements can be enforced and it could limit your ability to find another job.
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