Severance packages are becoming increasingly common as more companies choose to downsize or make cuts. Workers who are laid off from their jobs may wonder what they might expect from their severance packages such as how much money they might expect to receive. If you are offered a severance package by your company, the attorneys at Swartz Swidler may help you to review its terms and negotiate on your behalf to try to obtain more favorable terms.
How much will you receive?
There isn’t a standard amount that you might expect to receive in a severance package. The amount that you might receive may depend on a number of different factors, including the following:
- Are you a salaried or hourly worker?
- Are you a member of the upper management?
- Why are you being dismissed?
- How long have you worked for your employer?
The amount of severance money that you might receive may depend on the answers to these questions. While severance payments may vary from employee to employee, most employers use formulas for calculating the amount to pay to each worker.
A standard formula that is used by many companies for hourly employees is to take the number of years that the employee worked for the company times one week of the employee’s regular pay. For example, an hourly employee who was paid 20 dollars per hour and worked 40 hours per week would have a regular weekly pay of $800. If the employee worked for the company for 10 years before he or she was laid off, he or she might expect to receive $8,000 in severance pay if his or her employer uses the standard formula.
Many employers also use a standard formula for salaried employees. This formula takes the number of years that the employee worked with the company times two weeks worth of regular pay. In this example, a salaried worker who earned a salary of $1,000 per week and had worked for the company for 10 years might expect to be paid $20,000 in severance. Severance pay for members of upper management may be even higher. Some executives may receive a year or more with of pay in severance.
It is important for you to understand that your severance pay amount is negotiable. Even if the human resources department tells you that the company uses a set calculation, you should ask the company to pay you more or to offer you other benefits such as extended health care benefits. Finally, it is a good idea to get help from a severance attorney at Swartz Swidler. A lawyer may identify other parts of your severance package that might be negotiated so that you secure more pay and benefits.