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Although they are not usually required by law in the United States, severance packages can ease job-loss transition for employees and provide protection from litigation for employers. A severance package letter can be the severance contract itself or a summary of the contents of the package. Even though there is no standard format for severance packages, certain features are usually included.
Details of Termination
When the severance letter is the agreement, the details surrounding the end of employment are explicitly stated in detail. A summary letter avoids the legal terminology that can depersonalize the job termination. Reviewing points such as the date and time of termination, paperwork to be processed and company items to return by way of a plain-language summary reinforces the important details while respecting the terminated employee's dignity through a difficult time.
A severance agreement is a contract between employer and worker through which the employer obtains a waiver of future legal action from the employee. While there is no requirement for an employer to give severance pay, a valid contract is supported by a consideration in return for the waiver, or it may not be legally enforceable. That consideration is usually severance pay and -- sometimes -- continued access to other benefits. Payment provisions and continued benefits are typically the foremost concerns of the fired employee and are often included in a summary letter.
Other Benefits and Considerations
Some companies may be required by state and federal laws -- such as the Consolidated Omnibus Budget Reconciliation Act -- to maintain eligibility for health insurance coverage for a departing employee at the employee's expense, whether or not the employer offers to cover costs for a period of time. Summarizing any health insurance provisions provides reassurance for the employee. Providing references or outplacement services for terminated employees may not be part of the legal severance agreement and can be included in a severance package summary letter.
Negotiating a Severance Package
Not all severance package letters are from a company to an employee. In some situations, you -- as a dismissed employee -- may not agree with the severance offer. You may be able to leverage a review of severance by reminding your employer of contractual expressions the company made to you or of any discrimination, retaliation and damage to your business reputation that occurred. Although you are probably motivated out of your need, presenting need as a reason for a severance review will not likely influence your employer.
- Nolo: Should You Offer Severance Pay?
- The Employerologist: Severance Agreements -- Parting is Such Sweet Sorrow? Part 1
- Legal Match: What Is a Severance Package?
- Sklover Working Wisdom: Negotiating Severance -- Your 6 Sources of Leverage
- U.S. Department of Labor. "Severance Pay." Accessed Aug. 16, 2020.
- U.S. Department of Labor. "Wages and the Fair Labor Standards Act." Accessed Aug. 16, 2020.
- NBC News. "While Sears executives get $25 million in bonuses, laid-off workers struggle during Christmastime." Accessed Aug. 16, 2020.
- New York State Department of Labor. "Dismissal or Severance Pay and Your Unemployment Insurance Benefit." Accessed Aug. 16, 2020.
A full-time content creation freelancer for over 12 years, Scott Shpak is a writer, photographer and musician, with a past career in business with Kodak.