Severance Pay Be Waived by the Employee

Severance pay isn’t required by law, but employers often offer it when they lay off employees or terminate them. This compensation may be in the form of money or perks such as continuation of salary, payment for unused vacation and sick time, and extended health coverage. The details are usually set out in an employment contract or severance package. The amount of severance pay can vary, depending on the industry and the company.

Whether your employer offers severance pay and how much of it you receive is a personal decision, but you should do your research to find out what is typical for your industry or profession. You should also consider the tax rate on any lump-sum payments you are offered as part of your severance package. Employers typically withhold the usual federal income, state, and Social Security taxes from severance packages just as they do for regular paychecks.

Some states have laws that allow you to collect unemployment benefits while receiving severance pay, but it’s important to check your local laws and consult with an attorney before accepting any such package. In addition, companies typically require severance agreement signers to waive their rights to file workers’ compensation or unemployment claims.

Can Severance Pay Be Waived by the Employee?

While some employers take a “take it or leave it” approach and won’t negotiate severance terms, others are more willing to negotiate to get the best deal for themselves and the employee. For example, if an employer knows it has a problem with a particular group of laid off workers, such as older employees or Muslim employees who have requested religious accommodations, it may be more willing to increase the payout to try to defuse the issue.

The severance pay Ontario you’re offered can depend on a number of factors, including the size of your employer and its reputation in the marketplace. For instance, larger companies can afford to offer higher severance packages than smaller ones because they have more financial resources to do so. A company’s culture can also affect how generous it is with severance payments and other perks.

Some severance packages include performance bonuses that you have earned but are not part of your base salary. This type of severance pay can be especially valuable, and you should try to negotiate to have as much of it as possible included in your package. However, your employer cannot require you to keep the details of your severance agreement confidential or not share trade secrets with new employers as a condition of getting this bonus. For this reason, you should always seek legal advice before agreeing to any severance package that includes a bonus. You should also avoid any deals that include a promise to remain quiet after leaving the company, as this could be considered retaliation.