A job loss or transition can be stressful, and understanding the details of your severance package is essential. A severance package is a group of benefits and pay provided to employees when their employment is terminated, usually outside their control. It’s not just about the immediate financial cushion. Several aspects require careful consideration.
Severance packages can vary greatly depending on the company and the circumstances of the termination. Factors such as your length of service, position and the reason for termination can influence what’s offered. It’s crucial to review the details and, if needed, seek advice to ensure you fully comprehend your package.
Know what your severance package includes
Severance packages commonly include salary continuation, accrued vacation pay, continuation of specific benefits and outplacement services. If you signed an employment contract, you must ensure the package you’re offered includes everything you’re due based on the terms of that agreement.
Consider your healthcare options
Understand the duration of extended healthcare benefits and explore options such as COBRA once the provided coverage ends. Some severance packages include several months of health coverage, but you should ensure this is in writing in case of any issues.
Think about the tax implications
Severance pay is typically subject to taxes. Understanding how this pay is taxed can help you plan your finances during this transition. Typically, it’s best to save the portion of the taxable pay so you can be sure you can cover the cost when you file taxes.
It’s crucial that you understand exactly what responsibilities and rights you have if you’re being released from your position with your employer. Working with someone familiar with these matters can help reduce the situation’s stress.