Typical Severance Package

Though not legally obligated to do so, most companies offer severance packages to employees whom they are about to lay off. The intent is to help these workers while they seek new employment, and to alleviate the threat of lawsuit. Typical severance packages are not limited to, but have the following features: they stipulate that the laid off person will receive severance pay that is usually based upon time served at the company. Some places of businesses also agree to cover health benefits for a specified period of time. Following this, the recipient of the severance package may opt to use COBRA, where he can still access the company health plan, although this can be expensive. Depending upon the package and his relationship with the company, the employee may be required to not be hired by a competing business, or divulge confidential information. If he is not satisfied, the employee may request to renegotiate the severance package, possibly with the help of legal counsel.

Fast Facts

  • Approximately 60% of businesses have severance plans.
  • A typical severance package for a union employee is one week of pay for each year of service to a maximum of 26 weeks.

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