The news of companies filing for bankruptcy or simply closing their doors brings up the question about what is going to happen to the employees who are losing their job. For some of these employees, there might be a severance package waiting for them. This can also happen even if the business isn’t closing but an employee’s position is being terminated.
A severance package is meant to ease the person into unemployment and help him or her to survive until able to find a new job. In many cases, the actual compensation received depends on the length of the person’s employment with the company. The longer a person has been with a company, the better the benefits in the package.
One of the most common inclusions in a severance package is pay. This is often expressed in a specific formula such as “two weeks’ pay per year of employment” or something similar. You should review your employment contract to determine what type of severance pay you may receive.
Some severance packages also include benefits. These can include continued health insurance coverage for a specified period or continued use of company facilities like gyms for a certain amount of time after the termination. The benefits that will continue should be clearly noted in the contract or severance package offer.
There are some instances in which employers might not want to provide severance packages when they are due to employees. Make sure that you know your rights regarding this because there is a chance that you will have to negotiate a package or take legal action to claim what is rightfully yours.
Source: The Balance, “What to Expect in a Severance Package,” Alison Doyle, accessed April 06, 2018