{"id":3710,"date":"2021-10-14T09:23:12","date_gmt":"2021-10-14T14:23:12","guid":{"rendered":"https:\/\/www.accrediteddebtrelief.com\/blog\/?p=3710"},"modified":"2023-12-07T11:34:41","modified_gmt":"2023-12-07T17:34:41","slug":"severance-pay-and-unemployment","status":"publish","type":"post","link":"https:\/\/www.accrediteddebtrelief.com\/blog\/severance-pay-and-unemployment\/","title":{"rendered":"Severance Pay and Unemployment"},"content":{"rendered":"\n

Being laid off from your job through no fault of your own is stressful. Fortunately, access to severance pay can help soften the blow and help you through your period of unemployment. After receiving severance pay, you may wonder if you are allowed to file for unemployment benefits. Learn how receiving severance will affect your benefit eligibility.<\/p>\n\n\n\n\n\n\n\n

What Is Severance Pay?\u00a0<\/h2>\n\n\n\n

Severance pay is money paid to an employee when they are terminated. It can be a part of a severance package and is usually paid in a lump sum. <\/p>\n\n\n\n

What Are Unemployment Benefits?<\/h2>\n\n\n\n

Unemployment benefits are payments made by the government to eligible unemployed persons. <\/p>\n\n\n\n

The Unemployment Insurance Program<\/a> was established by the federal government in 1935 and operates under guidelines established by federal law. However, the program is administered with the cooperation of state governments, which have considerable control in determining eligibility requirements and the amount of cash payments.<\/p>\n\n\n\n

How Severance Pay Affects Unemployment<\/h2>\n\n\n\n

Like any source of income, severance pay can reduce your unemployment benefits for the week or weeks in which it is distributed. For this reason, how you receive your severance pay has a significant impact.<\/p>\n\n\n\n

In general, the amount you are eligible to receive in unemployment is calculated as a percentage of what you were making when you were employed. Severance pay will be deducted from what you are eligible to receive and can lower your total benefits. <\/p>\n\n\n\n

Lump-Sum Payment vs. Weekly Payments<\/h3>\n\n\n\n

If severance is distributed as a lump sum, it will only affect unemployment for the week it was received. <\/p>\n\n\n\n

If severance is distributed in weekly, biweekly or monthly payments, it will affect unemployment each week it is received. <\/p>\n\n\n\n

If you plan to file a claim for unemployment benefits, a lump-sum severance payment will be to your advantage because it will only affect your claim for one week. It also requires less paperwork during your weekly certification process.  <\/p>\n\n\n\n

Why Do Employers Offer Severance Pay?<\/h2>\n\n\n\n

Severance pay softens the blow of involuntary termination for the affected employee. Employers may offer severance pay voluntarily as a gesture of goodwill or because it is stipulated in the employee’s contract or union agreement.<\/p>\n\n\n\n

Sometimes, an employer may offer a severance package because they want something in return.  <\/p>\n\n\n\n

In exchange for a generous severance payout, the terminated employee may be asked to: <\/p>\n\n\n\n