One of my good friends Christine is thinking about negotiating a separation agreement with her employer of six years. She works in marketing at Gap and is ready for a change of pace and a new career path. She got married to her college sweetheart last year and would really like to work at a public service company like the Friends of the Urban Forest, a non-profit organization which plants over 1,000 trees a year in San Francisco!
Christine grew up in the backroads of Billings, Montana, completely surrounded by nature as far as the eye can see. Although San Francisco is a relatively green city, after two years of living downtown, she moved to the Presidio Park where she could feel at home again surrounded by grass and trees. Her dream job would be to work at the Friends of the Urban Forest which happens to be conveniently based in the Presidio, an easy half mile commute by bike or shuttle. Sounds like a great gig to me!
I’ve known Christine for a while and I think she’s pretty savvy. She’s learned not to quit a job, but to try and get laid off instead. Why? Well if she simply quits her current job right now, she will receive no severance and might not be eligible for unemployment benefits given California’d deem that she doesn’t need UI benefits if she voluntarily quits. That’d be a risky move since it could take her months or even a year or two to land her next ideal job.
Even though the economy has roared back from the depths of despair, there’s growing uncertainty with the stock market correcting in 2018 and real estate markets all over the country slowing down. If corporate earnings are coming down, the future is at risk.
So before talking to her manager and to HR, both of whom she fortunately gets along with very well, Christine came to me for some advice with the big question what is a typical, average severance package like?
The Average Severance Package Comes In All Sizes
What’s important to note is that employers are under no legal obligation to offer a severance package. As an “at will” employee, you can literally be sent home packing one day without any recourse. If a company is closing down, it is also highly unlikely you will receive any severance package because whatever money that is left on the balance sheet is returned to creditors.
Given smaller/newer companies have a higher risk of closing down than larger, older, publicly traded companies, you should take into consideration the potential lack of severance should your position be eliminated. Remember that everything has value, not just the salary you collect from your job. You should also look at your health care benefits, company profit sharing, retirement matching, and severance package potential.
Keep in mind that because severance benefits are not mandatory, there is no one-size-fits-all package for employees. However, a commonly accepted formula for coming up with the average severance package is:
Number of Years Worked X 1 – 3 weeks + Minimum State Mandated Base = Severance Package.
Here are some examples of the formula at work based on extensive research talking to hundreds of people about their severance since 2012:
* 32 year old employee at a high tech/internet firm worked for 1 year and got 4 months.
* 30 year old employee in finance making $200,000 received 2 months base + 16 weeks after working for 8 years. Total severance amount = $96,153
* 28 year old employee at internet start-up making $80,000 worked for 2 years and got 2 weeks pay. Total severance amount = $3,076. Because the employee works at a private startup, the startup isn’t subject to paying the minimum WARN Act payment of two months in California. Her startup was money losing, like most startups are.
* 48 year old employee in manufacturing making $120,000, worked for 20 years and got 2 months base + 26 weeks. Total severance amount = $80,729. The employee has a classic severance package paid out to loyal employees.
* 34 year old employee making $250,000 at a strategy consulting firm worked for 11 years and got 3 months base + 22 weeks. Total severance amount = $168,269
* 38 year old employee making $180,000 at a large consumer goods company worked for 15 years and got 6 months. Total severance package = $90,000.
* 33 year old employee in the consumer appliance retail industry quit her job after a 3 month maternity leave. Received no severance. Quitting your job is the worst move possible because if you quit, you get nothing. You don’t even get unemployment benefits that can amount to as much as $1,900 a month for six months.
Another formula that is somewhat common is: 0.5 x N. N is the number of years worked, and the output would simply be the number of months in severance one would receive. Five years at a job = 2.5 months of severance.
Don’t Forget To Negotiate Your Severance
As we can see in the examples above, there is no set amount of severance. Based on the first formula, I’ve seen companies offer anywhere from 1 week to 4 weeks per year worked as severance. Given the wide range, it’s worth negotiating with your boss /HR manager to try and get the most possible. After all, the worst they can say is “no”!
And remember you can negotiate more than just money too. For example, you can coordinate a later separation date due to upcoming stock or benefits you will be receiving by offering to help finish a project or train someone. You can also also ask the company to pay for your COBRA healthcare insurance for a longer period of time after you are no longer working. There are generally outplacement services to help you find a new job as well. Be appreciative when negotiating, but do negotiate.
The reason why companies offer severance, even though they don’t have to is because they want to create “Goodwill” and protect their reputation. Can you imagine if a company like Apple laid off a 30 year veteran and gave him zero severance? That type of negativity would spread all around the Internet in a nanosecond!
Even if the 30 year veteran got 120 weeks of severance that was valued at $500,000, that’s chump change to a company like Apple with billions in cash. Just look at what that Greg Smith guy from Goldman Sachs did when he wrote his scathing good-bye letter in the NY Times. His letter alone probably cost Goldman hundreds of millions of dollars in market value!
Just look at the reputational destruction that occurred at Uber after it was discovered a manage repeatedly sexually harassed a female employee. The female employee reported the manager to HR multiple times and don’t do anything about it.
If HR asks you to sign a voluntary separation agreement, you will inevitably be given a massive document that highlights many points to protect the firm, ex. you can’t sue, go to a competitor for X amount of days, say bad things, etc. Burning bridges is never a good idea, so agreeing to those types of terms usually isn’t a big deal unless your employment rights after you separate from your company are severely restricted.
Leave With Money In Your Pocket
As more and more people look to leave the traditional 9-5 job for a more untemplate lifestyle, it’s good to know what your options are before you take the leap of faith.
I negotiated a severance in 2015 after nine years at my job. I never thought it would have been possible until I read Financial Samurai’s book, How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye. His book taught me my rights as an employee, and it helped give me the confidence to ask for what I want.
My severance ended up being worth equal to about eight months worth of pay. We figured out an ingenious plan where I was to work only two days a week for several months at FULL PAY. This essentially gave me a massive raise. Further, once the severance agreement was on the table, all my stress of dealing with clients and being a high performer went away.
At the end of the four months of part-time pay for full-time work, I received a severance and a goodbye gift. It was the best feeling ever! A year later, I was invited back to do consulting work for my company for a 35% higher rate. It was amazing.
Remember, half the battle in good negotiating is to come prepared with as much information as possible. It’s important to know where the realistic upper and lower anchors are so that you can maximize what you deserve! Aim high and try to get better than the average severance package.
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Great Article! I have been with my company 28 years. The company is traded and has over 50,000 employees. The division I work in is slowly being dismantled and employees are being later off with severance packages. I am aware of the terms of the severance package informally. It is inevitable that I will also be layed off soon. I am over 50. Is the company obligated to give me the same severance?
Financial Fred says
Very good article, thanks for sharing. I know the formula we use at my company and to simplify it bascially is 1 month severance for each year worked up to a maximum of 12 months for 12 years. As you said always, always negotiate as the company will always do a low offer to see if you will accept it.
However, the company will always look at other options before we provide a severence. This includes performance management, demotion or termination with cause. As if we can successfully do one of those options it will save the company money.
Of note, I am in Canada and the laws are different but I don’t know all the differnces.
This hits close to home. I got laid off at the start of the pandemic and they gave us a big fat $0 as a severance package! Tried to negotiate for at least SOMETHING but they wouldn’t budget :-/
John - Finance Guy says
Great article. Agree negotiating a solid severance can be a life changing experience and give you the money and take a significant amount of stress out of that next step. This can be anything from finding a new job, relocating or even starting a business.
Definitely a useful subject considering the current climate and many business having the need to downsize but also keep the companies operations continuing smoothly. Something to use as leverage for the people that have the skills/knowledge the company needs!
20 months is pretty sweet… Got to know so much about this topic. Thanks for the amazing article.
Maurice Bermans says
the us empire has the ’employment at will’ doctrine. Highly unusual and it basically gives the employer all the rights to terminate an employee with or WITHOUT any cause. Whatsoever. The severance pay is simply optional in the us. Employees without unions, etc…have little to any real rights.
United Technologies Corporation or UTC ‘s standard package for non contract US employees is one week of pay for each year of employment. No health care or other compensation. So if you worked for ten years you would get ten weeks of pay when you are let go. I think this is probably on the low end of any major US company. You have to sign a waver to get the money which I believe is standard. Take it or leave it. 😐
My husband worked for Apple for 25 years and was laid off in 2016, with 2 weeks of lead time and 4 weeks official severance pay. Also Cobra was paid for 4 weeks, that’s it. He is the loyal type and did not broadcast his horrible treatment he received, and is back there. I wish he had found something else, but he couldn’t after almost a year. Being laid off when over 50 is a tough road, and Apple made it even tougher.
Wow that is really tough. He deserved SO much more than that. It is definitely much harder getting laid off at 50 vs 25, or 35 especially since it is super hard to get hired at that age. Companies won’t admit that they discriminate on age but most do. Hopefully his hours and stress are better now at least being back there.
That is horrible of apple with billions in cash. Sounds like an age discrimination issue to me.
I have worked for the same company for 4 years, I recently became a apprentice if I fail courses I can potentially loose my job. Does any of my 4 years count towards a compensation if this should happen. I have plenty of documentation of treatment as well.
Hi, I’ve been working for this company for 19 years. I did get laid off but after 2 years and a half they called me back to work. now they are giving laid off again. my question is, if I get laid off and get a severance pay will they count the 19 years or just the 8 years that I’ve been back?
Most likely just the 8 years you’ve been back, but that doesn’t mean you can’t try to negotiate for your 19 years of service or something in between as a possible compromise.
Hi. I have been laid off in Texas at age 61 after almost 33 years of service. I have an exemplary work record, never written up and receive thank you letters for a great job every day. I work for a company that is ranked 50 in the Fortune 500 and have over 275,000 employees globally. They laid me off because they said there were too many people with my job title in the dept, which is not true, and my job is being eliminated. The employee handbook provides for 2 months base pay plus one week for each year. They are only paying for 2 months COBRA. They are having layoffs across the entire campus because of the end of the transition period and the old company paying the severance. but they say the WARN notice doesn’t apply because there are only 16 people in my Dept. I was caught up in a transition period of a company purchase. I believe I was laid off because the new company didn’t want to pay the large amount of severance due to my length of service plus my age of 61. I believe they should pay me for the 60 days under the Warn Act and perhaps more COBRA. I am aware that I can be fired “at will”, but believe because of my age and almost 33 years of service, that the severance should be more. Plus the Severance Release says that I am giving up the right to sue a full page of reasons and also says that if I don’t sign, all severance will be withdrawn even though it is in the employee handbook. Any opinions? Thanks.
William Randolph Jr says
My store will be closing down in a few months and they said that in order to have THE PACKAGE DEAL I would have to stay to the end,but how many weeks I shoukd be getting.I’ve been with the company for 38 years and I have hear that ALL I would get is 8 weeks,which don’t sound right to me.Others have said I suppose to get paid 1 week for every year I’ve worked;1979 ie 38 years.So which is it?
Drew Chun says
I’m 52 and have been with my company for 26 years. I’m currently on notice for not meeting my goals and I’m considering an early retirement and would like to negotiate a layoff. Do you recommend doing this with an Employment Attorney or doing it personally? Your thoughts would be appreciated.
Hugh J says
I wasn’t too clear on the negotiation part. If I was laid off without warning but haven’t signed the general release form to get the severance package, does that mean I can still negotiate a better severance package?
Sorry to hear about your situation. It’s always worth a shot trying to negotiate. You should do whatever you can to act quickly. Best of luck.
Wow… well in the states your have a lot less taxes but in Belgium… if you get fired after being hired (for example: after just 1 day) you get 2 weeks…
5 years it’s 18 weeks
10 years it’s 33 weeks
20 years it’s 62 weeks
I am moving to the US for a Job (with an US contract) and the lack of social security scares me like hell.
It’s a trade off between Less taxes / Job Security I guess.
Anyway, what a stark contrast between US and mainland Europe.
Fascinating insights into the severance system in Belgium! You’re right that there are a lot of big differences between the US job system and Europe’s. Parental leave is another one. So many people don’t get paid time off when they have a baby in the US but Europe seems to have generous benefits.
I was with my company for 7 years I have not officially been laid off however I was informed that while I was out on disability fighting cancer they gave my position to someone else. If they don’t have anything comparable to offer me when I come back what recourse do I have? If they end up laying me off, would I be entitled to a severance package?
I’m so sorry to hear about your situation. You should check with your state’s employment department. I don’t think they can legally give away your position if you are on disability leave, but I’m not an employment lawyer so I don’t know the specifics. You should definitely try to negotiate a severance package of some sort if they try to lay you off. You have a sensitive situation so I would hope they should be willing to work with you. Best of luck
IT Guy says
Thanks for the very informative article! I’m losing my IT Client Services Manager job that I’ve worked at for 15 years due to the client I support moving to another vendor. I’ve been an employee in good standing for my entire career and have held progressively more responsible jobs since I began as a computer tech in 2001. They are offering 3-months of severance for my 15 years of service. The company is located in NJ. The company is successful and we have a global footprint. I was at the company when it was privately held and remained an employee when we were sold to Merck a couple years ago. All of the original VP’s know me, but I’m just a name and number to our new bosses. What’s your opinion of asking for 6-months instead of the 3 they’re offering? Should I aim even higher? Thank you!
So sorry to hear that. I’m glad they are at least offering you something. I suggest you negotiate for more given your long-term track record with the company.
V. Bowdoin says
I’ve just been told, out-of-the-blue, that my 11-year position is going to be “phased” into something else that I am not trained for. I will be permitted to continue to finish off some projects, and a severance was mentioned ( but amount not yet discussed).
I have been with the organization (18 employees, very well funded) the longest, have made major visible contributions and have developed and grown a successful facet of this business while remaining a liked team player ( told so, and I really try, I like my colleagues).
I am still in shock. The only reason I can see for this move is that my new boss and I have different styles of communication and that I’m the only employee that is not new.
Well, whatever the reason, I was also told that I could consider completing my projects on a contract/consulting basis. (I think there is a genuine attempt to be amicable due to my longstanding working relationships and mutual contacts.) We have not yet discussed any details or agreements.
Question: If I do agree to finish my projects as a contractor, I should still try to negotiate severance and health, right? I’m also concerned that my boss will be frugal, despite the efforts that I’ve continuously put in.
Thanks for any advice. I plan to read the book, too.
I’m so sorry to hear your news. It’s no wonder you’re still in shock, especially having been with your firm for 11 years. Definitely negotiate severance and insurance benefits. Also, try to talk to your state’s employment department and find out what protections you have under the WARN act. Sometimes small companies are exempt but it all depends on your state and the circumstances. You may want to negotiate to stay on as an employee until your projects are done so you won’t lose your insurance benefits right away and still request a severance upon your departure as well. As an 11-year employee don’t underestimate your leverage.
V. Bowdoin says
Thank you! Appreciate the input – especially about healthcare and the leverage, I know I underestimate my value in the desire to be humble, (unfortunately a fault in business).
I’ve learned from my HR (not may also be able to negotiate a contract situation for my incomplete projects, but still in disbelief.
I had just hit my 27 years working as a Store Manager. My Assistant Manager would have hit 19 years this week. Last week, on the same day, we were both laid off due to “company restructuring”. They did not give either of us ANY severance pay. They are a smaller company in California and are having financial problems and said they could not afford to keep us on at a store that was showing losses. Yet ALL their stores are showing losses. In my shock, I didn’t even think of severance pay and was unprepared to negotiate anything. My medical and other benefits will end this week. I’m considering calling HR and asking for a severance packet, after the fact. I doubt it will lead to anything, and feel greedy knowing they are having financial problems, but if feel like I’ve been slapped in the face after 27 long dedicated years. I have a very clean history with the company.
Oh my gosh I am so sorry to hear that! That is absolutely awful, especially after being such a long-term employee. I highly recommend you contact the California EDD, http://www.edd.ca.gov, and find out if your employer falls under the WARN act. I think you should also talk to HR and see if there’s anything they can do given your length of time with the employer and ask them directly too if employer falls under WARN Act and what your options are for Cobra. Apply for unemployment benefits with the EDD as soon as you can and hopefully you can get Cobra coverage for medical insurance as well. It can be hard getting a hold of the EDD at times but it’s worth the effort. Best of luck and hope you can start collecting unemployment soon to help hold you over while you figure things out.
Thanks for the quick response. I talked to the owners and it was still a no-go on the severance pay. They didn’t fall under the WARN act. But they did extend my medical and dental benefits for one more month so I could finish my dental procedure and get a 3 month supply of my medications. Thanks again. During this difficult time, it is nice to know there are people who are truelly interested in the well-being of others.
I worked for a big company for 10 month as assistant manager / manager trainee I get laid off a week ago and they offered me two weeks of severance pay but I did some negotiation with HR and they agreed to pay me 3 month of severance pay I haven’t accepted yet . should I accept the offer or should i ask for more?
I can’t say this without being somewhat offensive, but I’ll try to minimize the severity. Your friend’s eureka moment to try to get laid off rather than quit is purely magical thinking. Being laid off isn’t something one can try to do generally. Maybe rarely an employer will lay off instead of firing an employee to avoid confrontation, which could possibly leave unemployment insurance available. It’s being fired without the stigma of being fired, and unless they have a need to avoid some sort of backlash they aren’t going to offer severence.
Speaking of which, if one “tries” to get laid off, then being fired is just as likely, if not far more likely, than any other outcome. The concept is completely irrational. The intent of tying to get severence through scheming, even though it’s an asinine concept that doesn’t make sense, is an afront to those who have been laid off unexpectedly. If one wants a change of pace, then they ought to line up the new job before quitting and the gap can be eliminated or minimized to one or two weeks. There is literally no reason beyond pure self serving greed to attempt to manipulate one’s situation to recieve severence pay when all one must do is plan it out.
It’s a spin off of the advice I’ve heard many times. Avoid being fired and do not quit a job until you have another one lined up. That’s is pretty much the most one can do. We do not have control of being laid off. It happens to you, and it’s not a good thing. The only chance for achieving this aside from actually being laid off is to walk in the office and make a deal by presenting your argument to justify separation with severence, which is a different scenario entirely.
I realize this article was written back in 2012, I’m interested how her plan worked out. Did she end up ducking it up for another year or two, or did she strike a deal?
M L says
Just got terminated today. Worked for just less than 9 years and got 16 weeks base pay. I’m in NJ. Before I sign the agreement including the waiver to age discrimination, I suspect they’ll give my position to a subordinate who is younger than me eventhough I was told verbally my position is eliminated. Do I have any recourse?
So sorry to hear that. That’s quite upsetting news. Unfortunately, I’m unfamiliar with the laws in New Jersey. I suggest you reach out to your state’s labor department: lwd.dol.state.nj.us and check with an employment lawyer if you’re considering taking legal action against the firm. I’m not sure if there are limitations to what an employer can do to replace a position or create a new one that’s similar within a certain time frame of laying you off or not. If they indeed have to let you go and can’t keep you on, perhaps you can try to negotiate for more severance. Apply for unemployment benefits as soon as possible.
Just got laid off a couple of days ago, we had no warning, just a couple of minutes to say good-bye to everyone. I got 4 weeks for 2 1/2 years.
I’m so sorry to hear that! What an awful situation to be in. I hope the severance will hold you over until you can find a new job. Reach out to your employment agency and apply for unemployment benefits. Every little bit helps!
I’m so glad I came across this article! I was terminated last week due to my former employer’s decision to relocate the office…though truthfully the circumstances sounded fishy. I’ve not had the most cordial relationship with my boss or my co-worker because he denied my request for a promotion despite asking me to do more work and despite my co-worker making much more money than me although we had similar positions–but I was still blindsided by the termination.
The problem is that I had an at-will agreement with a small company that only employs two people (including me) and I was there for almost 3 years (would have been 3 years October 29th). They offered 3 weeks pay as severance as long as I sign away my rights to sue them. Is that fair or should I ask an additional week for no notice (it was VERY abrupt and my co-worker was not laid off at the time…just me =/). I know they aren’t obligated to pay me severance in the first place but I’m wondering if 3 weeks and no continuing health insurance coverage is normal.
It’s tricky with small companies, especially with only two employees. I don’t know what industry you’re in but a larger firm probably would have provided somewhere between 2-6 months of severance. Three weeks is on the light side but it is better than nothing. You should ask politely if they can provide another week or two – doesn’t hurt to ask.
As for health insurance, you may want to look into short-term plans to tide you over. Agilehealthinsurance has a bunch of different plans to choose from to keep yourself protected while you look for work. Definitely reach out to your state’s unemployment office and apply for benefits. Hang in there and best of luck!
Laid off after over 9 years working for a very profitable oil services manufacturer in Maine. ZERO severance and given less than 2 weeks to find family health insurance.( Would have had to pay $1666.00 per month to continue)… UI available. If I didn’t have accumulated sick and vaca time I would have OWED them money if I didn’t get uniforms back within 5 days. Company used to provide severance until they were bought out by a billion dollar British outfit a few years ago. If your employed there they make a BIG deal on time served…but not when layoffs happen. CEO and top management would be eligible for multi millions if same happened to them. Feel bad for the people that have to deliver the bad news to people( most of them are really good people)…..glad I was not one of them.
Oh wow that is shocking! Shame on them! You and your colleagues must have been devastated. Yeah I wouldn’t wish having to deliver that type of news on anyone, especially since the company wasn’t providing any severance benefits. Sure doesn’t sound like they were following labor laws but I’m not sure what they are like up in Maine. Not sure how long ago this happened to you but I hope you’re doing okay now.
Fortunately I will be OK..Wrote the CEO of the company and respectfully voiced my astonishment at zero severance. ( I’m sure that will go no where)…the company laid off 45-50 people this round…I had almost ten years but know of one individual that had 31 years…I don’t believe in Maine a company is required to offer severance unfortunately…the severance issue aside…giving one less than two weeks to acquire health insurance is pretty draconian as well..Obama-care is a nightmare…based on your last tax return or your current yearly income…hello…if your income drops late in the year to UI..but you made decent money all year your in a tough situation!
45-50 people is a lot. Wow that is crazy about your 31-year colleague. Wow. People staying at a firm for ten years is a rarity – over thirty years is almost completely unheard of now. That sucks he/she had to leave because of forces outside his control.
Unless your employer was really small or didn’t completely shutdown/move, it seems like they are in violation of the WARN Act. I found this from Maine’s Department of Labor website:
“Closing or Relocating Workplaces
If your company plans to close or move and has 100 or more workers, your employer must give you at least 60 days notice. (The Workers Adjustment and Retraining Notification Act, “WARN,” 29 U.S.C. § 2101)
If a business with 100 or more employees closes or relocates more than 100 miles away, the business must notify the Maine Department of Labor or employees in advance. In many instances, employees who have worked at that business for three or more years must get severance pay. If the employee has to sue to get severance pay, he or she may get the legal costs back. (26 M.R.S.A. § 625-B)”
Is 1.5 weeks pay for each completed year of service good? I have 9.5 years in. Company is breaking a contract early by 2.5 years due to not producing in the U.S. Anymore. My company will bill that company our severance. There is nothing in the contract that states what the severance will be. Just that we will be taken care of. However, you would think that the company I work for would at least try to get us managers 2 weeks of pay per year of service since it isn’t even coming out of their pocket and they are breaking a contract 2.5 years early. I just finally moved to the area to be closer to work and then we get this news. I moved knowing we had 2.5 years left at least. I’ve been here 3 months and now this. It’s still better than nothing.
Hi Holly. So sorry to hear about your situation. 1.5 weeks sounds ok not great but a lot depends on what type of industry you’re in, the size of the company and what type of work you’re doing. Getting that news after moving so recently must have been hard to swallow.
I suggest applying for unemployment to help hold you over. Each state has different rules but you could be eligible to receive benefits even while you’re collecting severance. Check with your state’s unemployment agency to confirm their policies. Hang in there!
From a Fortune 500 business, is a severance package of $19,500 enough after 38 years of dedicated support to the company?
Financial Samurai says
Absolutely not. What happened?
But, we must remember that severance is negotiable. This is the reason why I wrote my book on How To Engineer Your Layoff. To help people negotiate better.
I got laid off in Seattle after 25 yrs. I received 50 weeks of severance, 50% of my Cobra paid for six months, and six months of outplacement support.
Financial Samurai says
Now that sounds awesome! Congrats!
50 weeks is awesome….50% of Cobra is ok..if your well generally..
Yes…great package…mine was ok too….better to get out of the place that was killing me anyway. Time to move on to better and happier things…Hope you have the same outlook cause 25 years is a long time.
I got laid off after 20 years of continuous service. I was offered only 4 weeks severance pay.
Wow 20 years straight of employment is a LONG time! I’m so sorry to hear you got laid off. What industry were you in and roughly how big was the company? Thanks for sharing with us!
No..not good…I am laid off after 19 years…got 1.2 weeks x 21 weeks pay…can collect unemployment after 26 weeks…..got medical for a full year from Cobra…company paid…job assistance….I feel blessed right now…I was MAD..but I would be more upset if I were you.
I was downsized at a local public hospital just 10 months before I became eligible for retirement. A 22 year dedicated employee with exemplary reviews. I lost all my accumulated sick leave of 1500 hours and was offered a mere 12 weeks at base pay. Labor laws are very weak in the State of Ohio. Of course, they always say it’s not personal.
I am aware of an entire Finance team working at a silicon valley high tech company (Fortune 500) that was laid off recently and only got two months severance….much less than what I have seen people get at companies with much less notoriety receive.
That’s frustrating it wasn’t closer to six months, especially since it was a Fortune 500 company. If you can get out early before a huge round of layoffs it can be easier to negotiate better severance packages, but sometimes things shut down completely out of the blue.
Financial Samurai says
Mike, that means the entire Finance team got ZERO severance, b/c the WARN Act of California requires all companies with over 100 employes to provide 2 months worth of pay.
Please check out this book or send to your friends who are at risk of being laid off or who want to leave. This is serious business with big bucks at stake.
Thank you for posting this article. I’ve been with a very large, well known digital company for 13 years working remotely and now they are looking to take that away from me not due to performance but due to policy changing where they want people in market. They are telling me they would like to find me a comparable position in our NY Office which is 2 hours door to door commute. Unfortunately, I have 2 children still in diapers and my husband is out of the house for 12 hours a day so this won’t work at this time. I’m still looking for a position within the organization that I can do remotely but keep hitting dead ends. If I don’t accept the NYC position when one comes available and if I don’t find one before then they said “they would give me 2-3 months severance opposed to the normal 2 weeks.” I don’t think this is right since I’ve given them 13 years and it’s not due to performance. Is there anyway to fight this? I’m an employee at will so I don’t think there is. 🙁 I wish i lived in Canada!
So, your friend voluntarily leaves a stable company during a difficult job market, not for declining health or retirement, but for a “change of pace.” She wants to ensure she receives the same treatment (severance and state unemployment benefits) as a worker laid off against their will due to downsizing, bankruptcy, etc. I can think of a few adjectives in addition to “savvy” that might better describe Christine.
That aside, it’s interesting to see the gamut of severance packages across the responders who have more unfortunate stories. Thanks for the helpful information.
Financial Samurai says
If you can figure out how to engineer your layoff, that is the sure fire way to go. I was able to get 6 years of living expenses as part of my severance and deferred compensation. I’ll take it!
After working for a consulting company in Florida for 15 years, I was given 4 weeks severance (per policy) after a reduction in force. I was division manager level. Based on the articles I read, this is well below average.
unfair termination says
Just terminated after 15 years in management with an 8 week base salary. Tried to negotiate something more close to norm of 1.5-1.8 weeks/year and got nowhere. No transition outplacement. Small business. small minds. Other employees don’t know what they are in for.
Financial Samurai says
15 years and only an 8 week base salary? Which state are you in? 8 weeks base salary is the MINIMUM for laid off employees in California under the WARN ACT. 3 months is the minimum in New York State. You essentially got ZERO severance I’m sorry to say.
Please read, “When A Severance Is Not A Severance Package”
May I ask if you’ve had a chance to read my book to setup the framework for negotiations?
I was unfairly terminated after 28 years in a management capacity ans was given 4 days sevseverance. After 2 months I was able to write a email to all the officers and said I would go to Eric because of my situation, they told me all they could give me is 10 weeks total and 6 mths.cobra. They are a rich company worldwide.
Financial Samurai says
4 days is crap after 28 years. You have rights and I’m glad you were able to get some money back by fighting back!
I work through a lighthouse for the blind as a switchboard operator on an air force base that is going automated in a few months. I have been here for 11 years and I will have 3 weeks vacation coming up before the deadline. The problem is, being visually impaired makes it very hard to find employment that pays well enough to make it these days. This company has been very generous to us over the years. Anyway, I will post the outcome here as soon as I know more details. Thanks for all the info!
I have been working for this really rude and illegal company for 8 months and I am stressed so badly I am not sick. I am leaving a company making 52500 per year and looking at 427.00 per week in unemployment earnings. I have so many things hanging over this guys head that I feel that I need to be compensated for the huge loss of wages. I’m not at all a nark but at this point I’m looking out for myself. What should I offer this guys for me to keep my mouth shut. And no I’m not blackmailing him just getting what I deserve for having to leave an illegal company.
Yeah that’s blackmail. If you know that the company is doing something illegal and tell your boss that unless he gives you x amount of dollars, then you are going to turn him in, that is considered extortion an is against the law.
Invest It Wisely says
Agree, Sydney, you should never, ever, burn bridges. That’s why I think getting laid off because you’re underperforming or “slow-playing” your job is a horrible way to go about it. Much better if you’re lucky enough that the department gets axed and you all get a sweet severance package. 😉
I didn’t think of the severance -> reputation link on the part of the employer, but it definitely makes a lot of sense. Small companies are likely to care a lot less about this.
Invest It Wisely says
P.S. I think the government-mandated norm here is 2 weeks per year of service.
Yep. The world is a small place and we recross paths with people more often than we’d like sometimes. I’ve seen interns and prior employees leave badly and then actually have the nerve to come back later on and try to get rehired. Not smart!
My friend has been hoping to be laid off for the past six years so she can get a severance package. Instead, she is watching others around her being laid off, and she has to assume the duties of those who have left. I know severance packages can be appealing, but in her case, her workload has increased tremendously, and I don’t think they will ever lay her off.
That’s a tough spot to be in. Being overworked can wear you down quickly. If she ever decided to step forward she should definitely negotiate. Since she’s doing so much work her employer would probably be willing to negotiate terms like her separation date if she offered to train someone to take over all her responsibilities.
Maybe it’s different in the US; all the jobs I’ve held have had standard severance clauses in my contracts.
Yep, the US doesn’t have any set rules. If a US company has a severance clause written in the contract then yes they become obligated to pay out based on those terms, but none of the offers I’ve signed for work in the US ever had a severance clause! I’m glad that I learned today that Canada is one country with severance laws that protect its workers!
And that’s great that all your job contracts in NZ have had severance clauses. It must make things so much easier to have those benefits spelled out in writing. I’ve never even seen severance discussed in any of my employee handbooks in the US either.
Financial Samurai says
What is the standard clause in NZ may I ask? thx
Julie @ Freedom 48 says
We get 1 week per year of service, up to 26 weeks I believe.
I didn’t realize that was law in Canada though – I just thought I worked for a good company! lol
Well the good news is now you know, and if you move to a new company in Canada at some point you’ll be protected there too! 🙂
Negotiate your severance like how CEOs of Fortune 500 companies negotiate their golden parachutes!
That’s a good way to look at it! 🙂
Steve R says
ha ha, I like the idea of this one. In reality, it is a good reminder to consider all aspects of employment when negotiating.
Financial Samurai says
Informative article Sydney! I’m doing some research myself on what the standards are and in California, the WARN act mandates 2 months for companies with more than 100 employees I believe, and then any discretionary severance on top of that.
1-2 weeks per year sounds like the norm. I haven’t heard of anybody NOT getting severance. Only those companies that go BK or decide to just shut down.
Thanks Sam! Yeah, it can be hard to anticipate if the company you’re working for is at risk of going bankrupt, especially if it is private. It helps to make friends with people in senior roles who may be able to give you hints either directly or indirectly if the profitability numbers are way down and the ground is starting to get shaky.
Money Beagle says
Our company is pretty pathetic and would only pay me out about a month with five years experience. They used to pay a lot more but cut it way back during the economic downturn and I really don’t foresee them doing any increases anytime soon.
Financial Samurai says
One money/4 weeks for 5 years experience…… hmmm, maybe more like 5 weeks to equal one week per year worked? I would ask them, or check the employee handbook. Then again, maybe you don’t want to blow yourself up or jinx yourself by asking!
I worked for a large auto finance company. When they closed their office in my state due to downsizing, they started offering severance for all employees with 3 or more years of service. I believe they offered 2 weeks for every year up to a certain maximum. I don’t know the specifics because I was about 3 weeks shy of my 3 year anniversary. They gave everyone who stayed through the final work day a bonus of 2 weeks pay.
Sorry to hear they closed down. What a bummer you were just under that 3 year length of service. 2 weeks for each year up to xyz max sounds like it fits right in with what I’ve seen too. That’s nice they offered that bonus for staying until the last day.
Financial Samurai says
Bummer Rachel. At least you got 2 weeks pay, and unemployment! I’m editing your post btw, and plan to publish it soon! Thanks for the insights.
Daisy @ Add Vodka says
There are laws about severance packages in most parts of Canada. You get one week per year worked, up to a maximum, if the employee is let go for undue cause. I’ve heard of some people getting like 20 months!
That’s good Canada has severance laws to protect employees! Wow twenty months is an impressive number, especially if there are no restrictions for getting a new job during that time. Thanks for sharing Daisy!
Financial Samurai says
Wow… 20 months sounds sweet! How long does one have to work for to get that though? If 20 years… then….. I think that’s fair!
20 months? How is that if the calculation is one week per year? 20 months means the employee would have worked 80+ years?
I think what she means is that Canada requires a minimum of 1 week per year in most areas, but some firms offer much more than that minimum per year, which is how some people can get to 20 months.