Severance Package

A severance package is compensation and benefits provided to an employee upon involuntary termination, typically when a role is eliminated, in a layoff, or sometimes in a performance-based separation. **What severance typically includes:** - **Cash payment**: Usually 1-2 weeks of pay per year of service (e.g., 3 years of service = 3-6 weeks pay). Senior executives may receive 6-12+ months. - **Benefits continuation**: Continued health insurance for the severance period (the employer typically continues paying their portion of the premium) - **COBRA subsidy**: Sometimes the employer pays COBRA premiums for a period after severance ends - **Accelerated vesting**: Occasionally some equity is accelerated upon termination, particularly for senior roles - **Outplacement services**: Career coaching or job placement support **What's required by law:** Federal law does not require severance pay for most private-sector employees at-will. WARN Act requires 60 days notice (or pay) for mass layoffs above a certain size. Some states have additional requirements. **The severance agreement:** Severance almost always requires signing a separation agreement that includes a release of legal claims against the employer. You're being paid to agree not to sue them. Read it carefully, and get legal review for significant amounts or complex situations. **Negotiating severance:** Severance is negotiable, particularly the cash amount, benefits duration, and non-disparagement language. Many employers expect negotiation on these terms, especially for senior roles.