Severance Pay Calculator
Estimate your potential severance package after a layoff.
Your Estimated Severance Pay
(Before Taxes)
$0
This is an estimate for informational purposes and does not constitute financial or legal advice.
About the Severance Pay Calculator
This calculator helps you estimate your potential severance package if you are laid off from your job. By providing your salary, length of service, and the company's severance policy (typically a certain number of weeks per year of service), you can get a clear idea of the gross amount you might receive. This is a crucial first step in financial planning during a job transition.
Formula Explained
The calculator uses a common, straightforward formula to estimate your severance pay:
- Calculate Weekly Pay: Your annual salary is divided by 52 to determine your weekly pay.
- Calculate Total Weeks of Pay: Your years of service are multiplied by the number of weeks offered per year.
- Calculate Total Severance: The weekly pay is then multiplied by the total weeks of pay to get the final gross severance amount.
How to Negotiate a Better Severance Package
Remember that severance is often negotiable. Here are some tips for your discussion:
Review Your Employment Agreement
Check your original contract or employee handbook for any stated severance policies. This is your baseline.
Highlight Your Contributions
Politely remind your employer of your loyalty, major accomplishments, and positive performance reviews to justify a better package.
Negotiate Non-Monetary Benefits
If they won't budge on cash, ask for extended health insurance (COBRA) coverage, professional outplacement services, or a positive reference.
Consult an Employment Lawyer
If you believe your termination was unjust or the offer is extremely low, a brief consultation with a lawyer can clarify your rights.
Frequently Asked Questions
What is severance pay? →
Severance pay is compensation that an employer provides to an employee after their employment is terminated through no fault of their own, such as in a layoff or position elimination. It is intended to provide a financial cushion while the former employee searches for a new job.
Are employers required to offer severance pay? →
In the United States, there is no federal law under the Fair Labor Standards Act (FLSA) that requires employers to offer severance pay. It is offered at the discretion of the employer, often as part of a formal company policy or as negotiated in an employment agreement. The only exception is if a WARN Act violation occurs (failure to give notice of a mass layoff).
How is severance pay typically calculated? →
A common formula for calculating severance pay is to offer one to two weeks of pay for every year of service with the company. For example, an employee with 10 years of service might be offered 10 to 20 weeks of their regular pay. The exact amount can vary widely based on company policy, the employee's position, and the circumstances of the termination.
Is severance pay taxable? →
Yes, severance pay is considered supplemental income by the IRS and is subject to federal, state, and FICA (Social Security and Medicare) taxes. It is typically taxed at a flat supplemental rate, which is 22% for federal taxes as of 2024.
Can you negotiate your severance package? →
Yes, you can often negotiate your severance package. If you believe the initial offer is low, you can present a counter-offer. It's helpful to highlight your contributions to the company, your years of service, and the potential difficulty of finding a comparable job. You can also negotiate non-monetary benefits like extended health insurance coverage or professional outplacement services.