Before you sign an employment contract, pay close attention to any language associated with severance pay. This may not be something you're concerned about now, but it could come into play in the future.
While no two severance policies are identical, here are four important points that are typically included:
- Conditions: This entails the circumstances in which an employee qualifies for severance, such as a layoff or involuntary termination.
- How severance pay is calculated: This is a critical detail, as it's used to determine how much money you receive. For example, you may receive a month's salary for every year you were employed by the company.
- How you will receive severance pay: Some employers pay severance in a lump sum, while others do so via regular payments for a predetermined period. Keep in mind that how you receive severance pay could impact your unemployment benefits.
- Documents to sign: Your employer will require you to sign an employment agreement that outlines its severance policy. You may also have to sign some form of legal release before receiving severance payments.
If you're legally entitled to severance pay after termination, don't let your employer get away with shorting you. Instead, review your employee handbook, employment contract and the company's severance policy.
Once you have a clear idea of how much severance pay you should receive, you can then take steps to obtain the compensation you deserve in a timely manner. If your former employer continues to fight back, you may need to take legal action to show them that you're serious and to get the severance to which you're entitled.