Severance Pay vs. Employment Claims

Employers make themselves vulnerable to legal action by not properly addressing concerns of employment discrimination, harassment, retaliation, and wage violations. After many years of advocating for employees, we know just about every tactic ruthless employers use to skirt responsibilities to their employees. One such way is offering an employee a severance package to deter them from taking legal action against the company. To further discuss this, let’s first answer some of the most common questions. 

Severance Pay vs. Employment Claims

What Is Severance Pay?

Severance pay consists of benefits or compensation an employee receives from his or her employer once the employment agreement ends. Employers may offer severance pay as a goodwill gesture to employees who were laid off or to those whose jobs were eliminated due to downsizing. They might also offer severance to employees who voluntarily retire.  In many cases, employers offer severance pay (with an attached release of all claims) to ensure their employee does not sue them.

A severance package might also include extended benefits such as health insurance or outplacement assistance to help the employee find a new position. 

Is Severance Required by Law?

No. There is no law that requires employers to offer severance pay to their employees. However, if an employee handbook or contract promises severance pay, the company must provide it. If they fail to follow through on the promises outlined in the employee’s contract, they risk legal action due to breach of contract. 

Who Gets Severance Pay?

Severance pay is not a “given” for most people. Just because you dedicated many years to a company only to be fired suddenly does not mean you are necessarily entitled to a severance package. Receiving anything beyond your salary for days worked and compensation for unused PTO days is completely at the discretion of your employer.

How Much Do You Get For Severance Pay?

There is no formula for what is the “right” or “fair” amount of severance pay.  While hourly workers, if offered anything, might receive one or two weeks of pay for each year of service, executives often (but not always) are offered higher amounts.

This is where the advice of a New Jersey severance package attorney will help. 

Speaking with New Jersey employment attorneys at the end of your employment will help you either negotiate a severance package if none was offered, or help you determine whether a company is offering severance in order to prevent you from filing a wrongful termination lawsuit

One of the first questions we ask as employment lawyers is why the employment is ending. With this information, we can determine whether the employee may have a claim against their former employer, and how much they might be able to recover. Where an employee has a legitimate discrimination or retaliation claim against the employer, this fact can give us the ability to demand much more  in severance pay than is being offered.  

New Jersey Employment Law Attorneys

If you believe your company is offering you no severance pay, or an inadequate amount of severance pay, speak to an employment law attorney before accepting the offer. Fill out our online intake form [put the link here] or call us at (856) 242-8491 to get in contact with us for a case review.