What Is a Fair Severance Package? Know Your Rights Before You Sign Anything
If you've recently been laid off, your employer may offer you a severance package—often presented as a "take-it-or-leave-it" deal.
But here's what most people don’t realize:
⚠️ Many severance offers are unfair.
And if you sign without reviewing it carefully, you could lose out on thousands of dollars in compensation you’re entitled to.
This guide breaks down exactly what a fair severance package looks like, how to evaluate your offer, and what to do before you sign that agreement.
🔍 What’s Included in a Severance Package?
-
Lump-sum payout (based on years of service)
-
Health insurance continuation (COBRA)
-
Unused vacation or PTO payout
-
Outplacement support (job search help)
-
Non-disparagement or non-compete clauses
-
Release of claims (you waive your right to sue)
⚖️ But here’s the catch: none of this is legally required in the U.S.
That means employers can offer as little—or as much—as they want. You have more room to negotiate than you think.
What’s a "Fair" Severance Package?
Let’s look at common U.S. standards:
| Years Worked | Fair Minimum Severance |
|---|---|
| Less than 1 year | 2–4 weeks’ pay |
| 1–3 years | 1 month’s pay per year |
| 3–5 years | 2 months’ pay per year |
| 5+ years | 3+ months’ pay per year or negotiated |
In the UK, severance (redundancy pay) is often based on age, salary, and tenure, with statutory minimums required. But in the U.S., it’s up to you to fight for a fair deal.
🚩 Red Flags in Severance Agreements
Beware of these common traps in severance contracts:
-
No continuation of benefits – leaves you without health insurance
-
Forcing a quick signature – they may give you 2–3 days when you have 21+ legally
-
Non-compete clauses – can block your next job
-
Vague payout terms – avoid phrases like “discretionary bonus” or “reasonable amount”
📌 You legally have 21 days to consider a severance agreement (and 7 days to revoke it after signing) under U.S. law.
🧠 Pro Tips to Maximize Your Severance
-
Ask for more: Especially if you’ve been a high performer or laid off unexpectedly.
-
Get unused PTO paid out: It’s often left off unless you request it.
-
Negotiate benefits: Ask for COBRA payments, job coaching, or an extension on vesting stock.
-
Consult a lawyer: Especially if your employer is large, or the offer is aggressive.
You don’t need to be a lawyer to negotiate, but knowledge is power—and it can put thousands more in your pocket.
📈 Real Payout Examples
-
Sofia, 3 years in tech: Initial offer: $4,000. Final payout after negotiation: $11,500.
-
James, 7 years in logistics: Employer refused severance. He used labor board and received $7,800 in backpay and PTO.
-
Olivia, marketing exec: Negotiated extra 3 months of COBRA after learning her rights online.
📌 Final Thoughts
If you’re offered severance, pause before signing.
A severance agreement is not just a thank-you—it’s a contract that ends your ability to sue or negotiate further.
Learn your worth. Protect your future. And make sure the next step is on your terms.