Severance Pay amid High-Profile Layoffs
While mass layoffs are a fact of life for many companies, severance pay can take the sting out of it. A comprehensive package of salary and benefits can help departing workers find new jobs, while also allowing them to save money for the next chapter in their careers. And while there’s no standard formula for how much a company must pay a departing employee, there are some basic guidelines that can help determine whether you are being offered a fair amount.
First, look at your needs. Consider things like whether you need a certain number of weeks’ pay, if you need extended health insurance coverage or outplacement services, or if there is anything else important to you. Then, weigh those factors against your employer’s severance pay policy.
Generally, companies will stick with their policies and not negotiate, but you can still try to make a case for more. For instance, you might argue that a severance package should be increased if you’re an employee who has worked for the company for a long time or has a specific skill set the employer could benefit from keeping on staff.
What to Know About Severance Pay amid High-Profile Layoffs
You can also point out that your employer may not have the best interest of all affected employees in mind if it’s offering a small package for a large group of people or is requiring everyone to sign their separation agreement on the spot, Green says. It’s illegal to force laid-off workers over the age of 40 to accept a severance agreement before giving them time to consult an attorney, per HR Brew.
Lastly, remember that a severance pay calculator is often part of a larger deal that includes a release and waiver of liability, Granovsky says. This is a way for the company to ensure it’s covered in the event that a former worker files a legal claim against it, including discrimination, harassment, pay violations or other wrongdoing.
The good news is that severance pay is usually tax-deductible for the leaving employee. Depending on the amount, you may be required to provide your company with your W-4 withholding information to get the correct payout. If you have questions about your tax situation, contact your accountant.
A severance pay calculator can help you determine the total value of your severance package based on your final paycheck and the length of employment, as well as any other deductions such as health insurance premiums or retirement contributions. The calculator also takes into account any unused vacation or sick days that you may be entitled to.
Then, you can compare your severance offer to what other employers have paid in the past or are offering to current or recent employees. Finally, if you aren’t satisfied with your severance offer, you can use this calculator to make a case for why you should be compensated more.