Am I Entitled to a Severance Package?

You have probably heard about top executives receiving substantial severance packages when the end their employment. A severance package is simply the pay and benefits that an employee is given when he or she leaves their employment at a company. But, is every employee entitled to severance pay when they leave their job voluntarily? If not, how do you know if you should be receiving one?

What Can a Severance Package Include?

In addition to the regular wages owed, a severance package can include payments based on months of service, and benefits including unused vacation or sick days. There is no rule as to what can be included; instead, it is all within the employer's discretion. While employers are not usually required to provide these benefits for their employees, there are a few exceptions to the rule.

Situations Where Severance Packages May Be Required

There are a few instances where an employee may be entitled to a severance package. The first situation is when an agreement, such as your employment contract, stipulates that you will receive pay upon severance. This is very common with executives, management personnel, sales personnel, and others.

The second situation where an employee may receive severance benefits is when they hold a union membership. In such instances, the employer will be subject to the requirements of a collective bargaining agreement. If that agreement includes a provision for severance pay, then a qualifying employee would be entitled to a severance package based on those terms.

Finally, a worker will be eligible for severance if their employer has severance plans in place. When this occurs, the employee will be provided with a Summary Plan Description. If a company provided severance pay in the past for similarly situated employees, you may be able to build an effective case for your own compensation.

What You Should Know About Most Severance Packages

Even if you fall into one of these categories and are entitled to severance pay, beware of the conditions your employer may place on you when administering severance pay. Most companies require employees to sign a general release and waiver of claims before they can receive any severance pay or benefits. This means that you must give up your rights to take legal action against your employer for employment-related issues.

Before you sign a severance agreement, it would be wise to seek the counsel of a seasoned attorney. A Birmingham employment lawyer can help you determine if your severance arrangement is fair and if not – or if you have been discriminated against – help you take proper legal action.

Any of the following may be grounds for recourse:

  • Discrimination
  • Sexual harassment
  • Retaliation

If you have experienced any of these unfavorable situations on the job, the benefits offered in a severance package may not be sufficient. Considering all aspects of an agreement can protect your right to file suit and seek the compensation you deserve

There Is No Severance Agreement. What Am I Entitled to Receive?

If there is no severance agreement that applies to you, your employer is still required by law to pay you for all accrued but unused vacation time unless there is a policy to the contrary. You are also entitled to receive the wages you earned up to, and including, the last day you worked for the company.


For experienced counsel concerning your severance benefits, get in touch with the employment law attorneys at Wrady & Michel, LLC. Call now to schedule your initial consultation!

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