Is anyone familiar with severance pay?

[desamnik]

My DH has worked for the same company for 22 years! Unfortunately, the company has been sold to a company outside of the USA, and his job is not going to continue. The company pays "severance" to laid off workers at a week per year of service.

I am wondering, once he gets laid off, do they pay the severance in a lump sum, or are you paid weekly/biweekly until the end of the severance?

Thanks for any input, just trying to get some ducks in row, waiting for the inevitable!

 

[YachtClubWoman]

For severance after a buy out - I received a lump sum

 

[CarolAnn856]

It varies. There is a good article highlighting unemployment and tax issues that the two forms raise. Google the phrase "severance lump sum vs payments" and choose the article by SHRM (Society for Human Resource Management).

Edited: Link didn't work.

 

[trip]

It varies. Here is a good article highlighting unemployment and tax issues that the two forms raise.

Guess you have to be a member to read the article.

 

[frostedpink]

At my company it’s always paid as a lump sum. And it’s taxed at a higher rate

 

[tvguy]

Mine was a lump sum, but I had 30 days to accept or reject the severance offer. I received the offer on December 15, and accepted on January 2 to push the income into the next tax year since I had no idea how long I would be unemployed.
My supervisor wanted me to sign the agreement right away, I told him not happening until I find out the tax ramifications. Business manager was there and just looked at him and said "he has 30 days to decide, to have an attorney review the offer, and to consult his tax adviser, and in my personal opinion he is very smart in pushing his decision until after the first of the year"
I was lucky, the package was 2 weeks pay for every year, I was there 16 years, and they would not challenge my unemployment claim. Fortunately, I was only unemployed 4 days.

 

[bcla]

I’ve been laid off a couple of times. The first time was a mass layoff, with a 60 day notice where we were basically told that we didn’t need to come in unless requested, and to go look for a job. We also got a special deal with additional severance. However, I was working again by the end of the notice period and it was just a lump sum. I suppose I could have requested spread payments.

The next time the HR director (at a small company) specifically brought me in to ask how I wanted it. A lump sum would have been withheld as if I was paid that amount for a regular pay period. She recommended I take the payments equivalent to my regular pay. A large lump sum might be withheld based on an assumption of making that much every pay period for an entire year.

The other detail was how much. At one company it was only as whole years rounded down. The other included partial years.

 

[Poohforyou]

My DH has worked for the same company for 22 years! Unfortunately, the company has been sold to a company outside of the USA, and his job is not going to continue. The company pays "severance" to laid off workers at a week per year of service.

I am wondering, once he gets laid off, do they pay the severance in a lump sum, or are you paid weekly/biweekly until the end of the severance?

Thanks for any input, just trying to get some ducks in row, waiting for the inevitable!

I received mine on the same cycle as when I was working. FYI, you can collect unemployment while collecting severance. Good luck to your husband.

 

[bcla]

It varies. Here is a good article highlighting unemployment and tax issues that the two forms raise.

Short answer (didn’t see the article) is that a lump sum is considered payment for one pay period extrapolated for withholding as if one was being paid that for the entire year. So if it’s $10,000 and regular pay is bimonthly, withholding is calculated assuming one was paid $240,000 annually.

It wasn’t mentioned that severance is typically in exchange for agreement not to sue the employer. Under California law I was given i believe three weeks to sign a severance agreement.

 

[desamnik]

thank you all for your replies. I am hoping it comes in a lump sum! It seems likely since the company is being sold, but my dh seems to think that "might" not be the case. Everything has been up in the air with regards to this sale for the past 6 months, with little info going to most employees. It does seem as though there is some real action happening soon. We'll see.

 

[rwdavis2]

Depends entirely on company policy. It's totally optional to the company.

 

[AlohaNow]

Typically lump sum is what I have seen. Though it can of course vary based upon company policy, as mentioned above. I would also add to not take their first offer and do not sign anything when it is immediately presented. They will make it seem like the offer is the only one that everyone gets, but one certainly has the right to negotiate. I'm sure you've seen it where you work, that there is the employee handbook, and then there are all the side deals that people make. (Additional PTO, for example.) The same thing exists when one is being downsized. They will say, "Well, this is the standard exit package. Sign it or else." No go. You should always try to get more. What do you have to lose?

 

[CarolAnn856]

Guess you have to be a member to read the article.

That's weird. I haven't been a member in years. The link worked fine on my phone, but it isn't working for me now that I'm on my laptop.

However, if I Google "severance lump sum vs payments," that allows me to read the article by SHRM (Society for Human Resource Management).

 

[bcla]

Depends entirely on company policy. It's totally optional to the company.

If there is an official company policy for severance, it is considered a legal obligation. When I've joined a company, the signing terms typically would include any severance details, as did the employee handbook.

 

[MooseBucks]

My company pays it on the normal pay schedule. If someone ends up finding another job at the company that way they don’t have to keep paying it.

 

[bcla]

My company pays it on the normal pay schedule. If someone ends up finding another job at the company that way they don’t have to keep paying it.

I mentioned my first severance experience. With 60 days notice I was still being paid regularly, but had to wait until it was over to collect severance. I got a letter in the mail with the severance agreement to sign and return. We were warned that the company did reserve the right to call anyone back and rescind that employee’s termination, although we were basically told we were free to do whatever we wanted, including work. I don’t remember hearing about anyone who got a layoff notice and was kept. I did get a call from my old manager that he wanted me to come in and archive my work. It actually felt good to be back even if it was awkward.

I think the important thing to do is not burn bridges. My last layoff I returned a few times to say hi or when asked to help. I could still use the parking lot gate code, and I think they didn’t even change the alarm code.

 

[SueInBoston]

i think it varies by company. My work has options to take lump sum or as bi weekly pay. But if you take lump sum then you are completely severe from the company at time of payment and not eligible for insurance or job placement assistance.

 

[Gumbo4x4]

My company pays it on the normal pay schedule. If someone ends up finding another job at the company that way they don’t have to keep paying it.

That’s how mine was. They brought me back through a temp agency before the severance ran out, so for a few weeks I was double dipping.

 

[bcla]

i think it varies by company. My work has options to take lump sum or as bi weekly pay. But if you take lump sum then you are completely severe from the company at time of payment and not eligible for insurance or job placement assistance.

What does insurance mean? As far as I know, COBRA is not subject to modification. I don’t believe there’s generally much benefit to a company to do it either way. I do recall being offered about three months insurance before COBRA would apply.

 

[Allison]

What does insurance mean? As far as I know, COBRA is not subject to modification. I don’t believe there’s generally much benefit to a company to do it either way. I do recall being offered about three months insurance before COBRA would apply.

I assume they are referring to a situation where if you are still on payroll, you can participate in the health insurance program like you would if you were still coming into work. You pay your share, they pay their share.