Is severance pay a must if you are terminated? 

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Severance pay is truly a gift given to a departing employee from an employer.  While being terminated does not feel good, the severance package is given for many reasons. The company may be going through a layoff or a buyout. Perhaps you had been a key employee and your services are no longer needed.

Severance pay generally comes with an agreement, a binding contract that outlines the benefits you receive, along with the rules you will be asked to follow leaving the company. Often the severance agreement will have certain restrictions and rules. An example, as part of receiving a severance package, you may not be able to contact businesses with which the current employer does business. This is often known as a non-compete agreement.  

There is no legal requirement for a company to offer a severance package and there is no legal requirement for you to sign it. Once signed, it is a legal document by which both bodies must abide.

All compensation you receive from your company is taxable, even severance pay. Pay from unused vacation and sick leave also will be taxed.  

The good news is you may collect unemployment and severance together. Your unemployment benefit may be delayed if you get your severance over several weeks, but it is still yours to collect in Missouri.  

Remember, severance is something the employer wants to give an employee, but it may be negotiable.  If you feel you are confidant in your accomplishments while employed and have relevant information to exhibit your value to the company, you may be able to increase the amount of the package or benefits given. If you are wanting to change some of the clauses affecting the employer’s business, it could be an uphill battle. And lastly, remember, you do not have to sign the agreement. In not signing you can go about your business as you see fit. Of course, if you have an employment agreement with the employer, please read it. It may have language protecting the employer’s business, not you.

Meet the Expert

Anne Williams has been the President and Owner of this Missouri-based staffing firm, JobFinders Employment Services, for 34 years. In 1986, Williams opened her first small office, and today, that business has steadily grown into one of Inc. 5000’s list of fastest-growing companies with seven branches.

Williams oversees a team of 27 employees who place candidates in direct-hire, temporary, and trial-to-hire positions.

Williams and the company have been recognized with honors such as “Woman of the Year,” “CEO of the Year,” and in 2012, she was named the United States Small Business Administration’s top “Woman Owned Small Business” in the St. Louis district. JobFinders has been named the Top Company in Columbia, MO and has been awarded Reader’s Choice award in several communities. Williams enjoys spending time in the community, traveling, and hanging out with her family. She is a proud member of the American Staffing Association, National Association of Personnel Services, Missouri Kansas Search and Staffing Association, Society for Human Resource Management National Association and the Springfield, Sedalia, Central Missouri branches and serves as the Chambers of Commerce in each community the company serves.