Submitted by denferno t3_11egfpe in personalfinance
My entire division in a large company just got told we are gone immediately. My savings are good and I’ll land on my feet but the company is only offering one week of severance?? Why so little? Is there a standard amount or is this a trick to get my to sign something saying I won’t go for more that I’m entitled to?
> entitled to
Well, gotta tell us where you're at.
In most places you're not entitled to anything. Most companies will do something like one week of severance per year of service.
there is no legal requirement for severance. it's essentially nice money in exchange for signing an agreement not to badmouth your former employer
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The standard and any legal requirements depend entirely on where you are.
Beyond anything legally required, it's a negotiation like any other. If you don't have leverage (e.g. the potential to create a legal headache for your former employer), you probably won't get much more than you're offered.
Does your employer have more than 100 employees and more than 50 were affected by this layoff? If so, you may be provided protections under the WARN act requiring 60 days notice for layoffs.
If not, there's no federal requirement for severance pay or advance notice of layoff.
Severance isn't something that's guaranteed in most places. So there really is no normal or standard amount. Most give nothing. Some give a week or two. I've seen some companies offer something like 2 weeks of pay for every year of service. So it varies. If your company is offering 1 week, then it's one week.
So when you say you will agree to not go after more than you're entitled to.....you're unfortunately not entitled to anything. And if they're firing you, you probably have no leverage here. Review your company handbook/policies to make sure they are complying with any documented termination policies. I guess you could consult a lawyer if you think they may have violated some local law in firing you. But beyond that, I'm not sure what leverage you'd have to ask for more.
Did you have a severance clause in your contract? If not and you’re at-will then you’re not entitled to any severance.
You should still be able to get unemployment. Severance is basically just a bridge to unemployment so you at least get your full pay for a bit.
Severance is the company saying "we'll pay you this much as you leave without you having to work, but just sign this paperwork...". That paperwork boils down to you agreeing this layoff was legal (you're not being fired because of your race or as retaliation for something you did) and you won't take them to court for it. It may also include something like a "non-compete" clause where you agree not to work for a competitor of your ex-employer for some period of time.
Ideally, they'll lay out what is in that severance agreement, and will recommend you get your own legal counsel to read it over. You do not have to sign that paperwork. And if you don't, they don't have to give you anything.
How much severance is offered varies a lot. Often it's based on length of employment. I went through a layoff that gave one week per year of service. Or there may be a base level (say two weeks pay) plus one week severance per two years. It may or may not include continuation of benefits during the length of the severance period (handy for things like health insurance before COBRA kicks in). Or any number of other options. But there's not really anything that you'd definitively be "entitled" to, just what terms are offered and whether or not you accept.
Employees don't really have much leverage around negotiating severance, other than accept / decline. Declining is only going to be beneficial if you think you could win a wrongful termination suit for more than the offered severance (a very long shot in most cases).
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