Generally, a severance package is made up of pay and benefits given by an employer to a dismissed employee. But contrary to some belief, a severance package is not given as an entitlement prescribed by law, rather it is an employer’s prerogative – which means this benefit is given as a token under the employer’s discretion.

While some companies may offer packages to departing employees, other companies offer nothing at all. Hence, severance packages may also vary in content. In any case, a severance package usually contains benefits meant to help an employee. In some instances, some employees even consult with lawyers to be able to negotiate for a better severance package.

In addition to the employee’s remaining regular pay, a severance package may also include some of the following benefits:

• Medical, dental or life insurance
• Retirement benefits
• Payment for unused vacation time or sick leave
• A payment in lieu of a required notice period
• Stock options
• Assistance in searching for new work, such as access to employment services or help in producing a résumé
• An additional payment based on months of service

Typically, severance packages are offered to employees who are laid off or those who retire. In some cases, they may also be offered to people who resign, regardless of the circumstances, or are dismissed or fired.

Employees may find the rules and policies governing severance packages in a company’s employee handbook. These policies are often based on local employment statutes and federal law.

Most severance contracts stipulate that the employee will not sue the employer for wrongful termination or attempt to collect on unemployment insurance. Otherwise, if an employee has plans to take legal action against his employer regarding his dismissal, he must return the severance pay or refuse to accept it.

An employee who gets a severance package offer has two options: to take a lump sum severance payment, or opt for salary continuation payments. However, before taking any of these options, he must take into consideration the following facts:

• If an employee needs immediate funds, he can take the lump sum option.
• A salary continuation payment option is better if an employee needs a health insurance.
• If an employee does not qualify yet for pension or retirement benefits, salary continuation may be a good choice.
• An employee must also consider the tax consequences of investing his severance pay. Depending on his investment, the money may be taxed as income or its earnings may be tax-deferred. On the other hand, a salary continuation option has lower income tax rate.
• Severance payments may also disqualify you from unemployment benefits. Typically, if you are receiving severance payments in the form of salary continuation and those payments equal or exceed your previous weekly wages, it qualifies as income.

To an employer, offering a severance pay as part of the package of a terminated employee may also be a difficult decision. At times, he may have to decide about the scope and the amount of benefits he must give to a dismissed employee. Some companies however have adopted a standard in calculating an employee’s severance pay.

How much really should an employee receive as severance pay?

Severance pay is normally contingent on several things, which include but are not limited to the following factors:

• Existence of an employment contract – Severance terms are written into many employment contracts and benefits may depend on what is written in the contract.
• The cause of one’s termination
• Length of service – Severance typically ranges from no pay to one or two weeks of pay for each year of service, with pay capped at a certain number of months.
• Size of the organization – Larger companies generally offers more formalized severance packages.
• One’s position in the organization – Executive-level or senior employees normally get anywhere from six months to one year of pay while management-level employees get anywhere from three to six months. Nonexempt staff might get anywhere from no severance to 12 weeks’ pay.
• Private, public, or nonprofit sector – Severance packages vary greatly, depending on the type of organization.

This is a guest post. About the author:

By Manuel Salvacion. Visit our website to learn more about employment severance package. To pursue a claim, consult with our skilled employment attorneys.

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3. Should You Accept a Low-Paying Job Offer or Stick With Unemployment Benefits?

So you’ve recently been let go from your company and are receiving unemployment benefits when an amazing thing happens – you get a job offer. But it’s not the offer you were hoping for. While it will definitely pay the bills, it will result in you taking less than 50-percent of what you were making.

What do you do? Is it best to take the low-paying job or continue taking the unemployment benefits? This is definitely not a decision that comes with a textbook answer. However, you may benefit from some basic tips to help guide your decision.

Get a Good Grasp of Your Field

While holding out is not a bad idea for a while, it’s not the best idea to do so blindly. Meaning, if you’re applying for jobs and simply collecting unemployment benefits without knowing what’s going on with your field, you may be setting yourself up for a financial and career disaster.

Think about it; there is a reason that your job let its employees go. Business probably was not good. This means, depending on your field, suffering business may be widespread. Therefore, it is important that you spend time studying what’s going on in your field so that you don’t waste unnecessary time pursuing dead-end opportunities. Check to see if the companies you’re applying with are planning to layoff workers anytime soon. You could even take this paid time off to educate yourself in new fields. It may have been a blessing in disguise that propels you toward a passion you’ve always wanted to nurture.

You Were Given Unemployment Benefits for a Reason

One thing that you should keep in mind when deciding whether to take the lower-paying position is that you were given unemployment benefits for a reason. Not only are they meant to help keep you afloat as you look for new employment, but they were established to make sure that those who are recently unemployed don’t feel that they have to accept anything that’s offered to them.

While you are required to actively seek employment while receiving benefits, there is no rule that says you have to take anything you’re offered. So if you feel that you can go a while longer on the benefits you’re receiving then continuing your search for a position that is roughly comparable to the job you previously held in both salary and benefits isn’t necessarily a bad thing.

Choose Wisely – And According to Your Family’s Needs

As mentioned previously, choosing the right path in this type of situation is not easy. Depending on your family’s financial needs in the short and long term, your decision can vary greatly. So take time to sit down with your family and weigh your options collectively, to ensure everyone is considered in this challenging decision.

The decision to accept a lower-paying position can be devastating when you consider the years of hard work you may have put into another job. It can be a major blow to the ego and wallet. So make sure that your decision to accept or deny is an informed one to ensure you and your family can benefit for years to come.

About the author:

Heather Eagar is a former professional resume writer and is passionate about providing working professionals with current, reliable and effective job search tools and information. If you’re in need of a resume service, compare the top ones in the industry at http://www.resumelines.com

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Each month thousands of employees move to a new community to start a new job. Moves often are more expensive than anticipated. Not only is there the actual expense of moving but, for a homeowner, there are expenses connected with selling the current home and buying another home.

Some corporations may offer to cover some or all of the relocation costs for employees who are moving at the company’s request. Larger companies usually offer a more elaborate relocation package than smaller firms. These benefits become particularly important when there is a large increase in housing costs.

When interviewing for a job, or considering a transfer, ask whether or not the company has a relocation program and find out as much about it as possible.

Below are listed some of the benefits which may be offered to a relocating employee. Each situation may call for a different bundle of benefits; analyze your own situation carefully. It is always best to negotiate these matters as part of a transfer package, before accepting the new job to avoid surprises to either party after the move has taken place.

• Cost of a familiarization and house hunting trip for the employee, spouse, and family.
• Extra time off (with pay) for traveling and house hunting in the new location.
• Moving expenses, including packing and insurance.
• Travel expenses (lodging, meals, gas, etc.) while traveling to the new location.
• Assistance in the sale of your current home:
  company assumes responsibility for monthly payments, taxes and insurance until the home is sold; price guarantee – if sold by the employee, the company will pay the difference between the net selling price and a specified price; alternative price guarantee - if employee cannot sell the house within a specified period of time, the company will buy it at a specified price; company will pay commissions and other costs of sale.
• Assistance in the purchase of a new home:
  company to pay rent of temporary quarters until a permanent home is located;
  buy down the interest rate; company may offer low or no interest loans. A salary level commensurate with any increase in cost of living between the new location and your old location.

How hard should you push for relocation expenses?

Try to analyze your bargaining position relative to the prospective employer. Does the employer have many options? Are there many qualified local applicants for the same job? Or do you have unique skills unavailable in the local market?

Ask yourself, “If I owned the company would I be willing to pay for my relocation?”

Join the forum discussion on this post

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In the past, I’ve written about what you should do first if you get fired or laid off.

Over the weekend, over at the WiseBread blog, I saw a new strategy that had never occurred to me before.

Essentially, it boils down to remembering to ask the HR folks if they’ll give you the unvested portion of your 401 (k).

A lot of companies have 401 (k) matching plans. It’s basically free money: they contribute x dollars to match every y dollars you contribute. The catch is, you have to stay with the company long enough for that to “vest.” If you leave too soon, they don’t have to make good on that money.

But if they fire you before the vesting can happen… well, that’s not your fault!

But a lot of employers are willing to give you the unvested portion of your 401(k) account if/when you’re being let go.

Especially if it’s not performance related and they just need to downsize. It’s not that big of a deal to them and in an effort to make these kinds of moves as painless as possible, there is a good shot you’ll get this money.

The worst thing that can happen? They say no.

Hmmm. I don’t know. If they’re in the saving money downsize mode, I’m not so sure they’ll be so sanguine about handing over the money.
But then again, this is one of those I suppose it can’t hurt to ask situations. I mean, they are going to give you (hopefully) some sort of severance package. So why shouldn’t the “free money” be a part of it?

Most of us, when we’re in the frenzied moment of being handed a pink slip, don’t tend to think clearly. So, make a mental note now. If you’re ever facing the proverbial firing squad, don’t forget to ask if you can take your “free money” with you.

It’s better than leaving money on the table.

And as always, if you find yourself suddenly laid off, it might be time to hire professional help.

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Not really a surprise, right?

A new CareerBuilder.com survey finds that nearly 40 percent of the 3,000 HR reps and managers polled plan to make administrative cuts at some point in 2009.

Furthermore, 65 percent of those who plan on cutting costs are also scaling back on company events like social gatherings and picnics. Sixty-one percent will curtail business travel.

Benefits, Perks To Be Trimmed in 2009. Via Cheezhead.

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Counter-intuitive time, people!

I am the sort of guy that tends to believe you should never be afraid to ask for a raise. (The proviso of course being that you shouldn’t ask too much or too often or expect things that are outlandish.)

But even when times are tough for your company? That’s when a raise should be the last thing on your mind, right?

No, and here’s why:

1) Asking for a raise can be a good way to tell you where you stand.

If times are tough, and my most valued employee comes to me and says they’re unhappy with their situation, this is a double crisis for me as a manager. After all, if times are tough, the last person I want to piss off or lose is the most valued member of my team… my number one producer.

As a manager, I need my best employees to be happy and productive because they are the work-horses I’m depending on to turn these bad times around. If I lose them, the bad times will only get worse.

So if you ask for a raise and the boss bends over backwards to try to placate you, then not only is your job safe, you know your boss is depending on you. You’re a key part of their survival strategy.

On the other hand, if they laugh in your face or say something like, you’re lucky to even have the salary you currently have, then you know where you stand also: not on solid ground. But hey, that’s information too. You can begin to assess your options.

2) Even if they can’t give you a raise, they might find other ways to keep you happy.

After all, even if your boss can’t get you a raise right now, you’ve made them aware that you’re a bit unhappy or at least a bit hungry. They might start to think of other ways to reward you. They might even start to think of other forms of non-monetary compensation.

Maybe they’ll be more lenient when you ask for some extra time off. Maybe they’ll keep an eye out for an opening on that project or new position you’ve wanted. You might even find yourself singled out for extra or individual praise, raising your profile in the office.

This is my most important point about asking for a raise even if you know the boss will say no: you’ve put them on notice. If they really like you and value you, you’ve made them aware that they need to take steps to keep you happy. Even if more money is not forthcoming, you have at least put yourself on their radar to pay better attention to your needs. Making the boss aware of your feelings might pay dividends down the road in ways you can’t anticipate but are just as valuable as a raise.

3) You never know, they might say yes.

If they say no, and there are no hard feelings for having asked, then you’re out nothing.

But they might say yes. And any time you wasted being afraid to ask was just the lost opportunity to make more money sooner.

Again, put yourself in the position I described in point number 1. You’re the superstar. The best producer. If the company is going to ride out these hard times, they’re going to do so riding on your back and your productivity.

If you find yourself in that situation, then you really are more valuable to your employer. And maybe you should be compensated for that.

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The best time to prepare for a job loss or a layoff is before it happens. Anticipation. Preparation.

I’ve been thinking a lot about this issue lately, so I’ll have a bunch of posts on this this week. There were a lot of good things on the internet this weekend about just this topic.

Starting with this excellent rundown: Health Insurance Options After a Job Loss.

If you don’t have a spouse’s employer group plan available to you as a back-up, there’s always Cobra, the acronym for the law that allows you to continue on your employer’s plan generally up to 18 months after a job loss — as long as your employer has at least 20 workers. If you worked for a small business that offered health coverage, you may be able to get Cobra-like continuation from a state-administered program. Visit Georgetown’s “Consumer Guides for Getting and Keeping Health Insurance” at www.healthinsuranceinfo.net to learn more about your state’s programs and options.

While Cobra can be helpful, especially for people undergoing a course of treatment, it’s often too expensive to be a viable solution because you’re on the hook for the whole premium plus a 2% administrative fee. The average price? Around $400 a month for an individual and $1,000 a month for family coverage, Pollitz says.

“The sticker shock is pretty horrific,” she says. “What you’re used to seeing deducted from your check — that’s just a fraction and you’ll see the rest of the pie when you go into Cobra.”

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One of my pet peeves is how middle class people can never get ahead.

You go $60,000 in debt just to get a degree for a career that is supposed to make you self sufficient.

Then you spend 20 years pay off that school debt.

Then (if you’re lucky) as soon as you pay off the debt, you go $100,000 in debt for your kids to go to school and start the cycle all over again.

They keep us in debt all our lives. That’s how they keep us down.

WiseBread has a nice little list of the career fields that tend to make student loan forgiveness a part of their overall compensation package.

These jobs tend to be in do-gooder and service areas like social work and the military.

Then there’s AmeriCorps and teaching in general. They don’t mention it, but there are a whole series of Teach For America like programs out there for teachers…

Teaching – There are many arguments as to whether teachers get paid enough these days. If you could add in up to $17,500 in student loan forgiveness, however, it can make this high-demand career more appealing. Teachers that work in designated “low income” school districts for a minimum of five years can see some of that college debt wiped away. More debt forgiveness is offered to those teachers with an emphasis in math, science, and special education. (Full details found on the student aid government website.)

7 Great Jobs that Offer College Loan Forgiveness (WiseBread)

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Counter-intuitive time, people!

I am the sort of guy that tends to believe you should never be afraid to ask for a raise. (The proviso of course being that you shouldn’t ask too much or too often or expect things that are outlandish.)

But even when times are tough for your company? That’s when a raise should be the last thing on your mind, right?

No, and here’s why:

1) Asking for a raise can be a good way to tell you where you stand.

If times are tough, and my most valued employee comes to me and says they’re unhappy with their situation, this is a double crisis for me as a manager. After all, if times are tough, the last person I want to piss off or lose is the most valued member of my team… my number one producer.

As a manager, I need my best employees to be happy and productive because they are the work-horses I’m depending on to turn these bad times around. If I lose them, the bad times will only get worse.

So if you ask for a raise and the boss bends over backwards to try to placate you, then not only is your job safe, you know your boss is depending on you. You’re a key part of their survival strategy.

On the other hand, if they laugh in your face or say something like, you’re lucky to even have the salary you currently have, then you know where you stand also: not on solid ground. But hey, that’s information too. You can begin to assess your options.

2) Even if they can’t give you a raise, they might find other ways to keep you happy.

After all, even if your boss can’t get you a raise right now, you’ve made them aware that you’re a bit unhappy or at least a bit hungry. They might start to think of other ways to reward you. They might even start to think of other forms of non-monetary compensation.

Maybe they’ll be more lenient when you ask for some extra time off. Maybe they’ll keep an eye out for an opening on that project or new position you’ve wanted. You might even find yourself singled out for extra or individual praise, raising your profile in the office.

This is my most important point about asking for a raise even if you know the boss will say no: you’ve put them on notice. If they really like you and value you, you’ve made them aware that they need to take steps to keep you happy. Even if more money is not forthcoming, you have at least put yourself on their radar to pay better attention to your needs. Making the boss aware of your feelings might pay dividends down the road in ways you can’t anticipate but are just as valuable as a raise.

3) You never know, they might say yes.

If they say no, and there are no hard feelings for having asked, then you’re out nothing.

But they might say yes. And any time you wasted being afraid to ask was just the lost opportunity to make more money sooner.

Again, put yourself in the position I described in point number 1. You’re the superstar. The best producer. If the company is going to ride out these hard times, they’re going to do so riding on your back and your productivity.

If you find yourself in that situation, then you really are more valuable to your employer. And maybe you should be compensated for that.

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With tax season coming up, I’ll be looking to highlight some financial and organizational tips over the next few months. First up, I have a tip I heard years ago that I don’t think has gotten wide currency:

You Should Create And Keep Your Own Personnel File

Every employer does it. Your personnel file is a quick and handy reference for your boss. It not only keeps track of every important legal piece of paper relating to you, but provides a quick summary of who you are and what you do/what you’re owed/how you’re performing.

Creating your own personnel file at home can be an invaluable tool that does just the same for you, but in reverse. In one place you can quickly reference anything you need related to your career. Whenever you have to do business of any kind with your current or future employer, you won’t be standing there empty handed when they pull out your file and have full records of your history. You’ll have a file of your own and can meet fact with fact, paper with paper.

What is the utility of this? I think you’ll understand when you see what your personal personnel file should include:

Your Personal Personnel File Should Include

• Your contracts. This means a copy of your signed contract that got you hired at your current job. Also, copies of your contracts at any and all previous jobs. There can never be any confusion about what you’re owed, what is expected of you, what was promised to you, or when and how your job will end… so long as you keep your own copy of all your contracts.
• Your most recent evaluation reports. Good or bad, you should request copies. If anyone starts to question your performance, your employers’ own evaluation of you work, in their own words, is invaluable. And if your performance was poor in the past, keeping lousy reviews can be helpful to demonstrate growth or improvement.
• Anything legal you sign at work. Such as: a noncompete agreement; a confidentiality agreement; an agreement relating to a company-provided property such as a car or a cell phone or a laptop; liability waivers; etc.
• Your W-2 forms and any related employment tax documents. Going back at least 3 years. Other possible documents to include: 1099s and W-4s (the Employee’s Withholding Allowance Certificates).
• Your benefits/retirement summary. And any other documents that highlight all the perks and benefits you’re entitled to under your contract.
• Your health and insurance benefits summary. As an addendum to the above, if you’ve got an outline of the health benefits you are due, make a copy and throw it in here also. You should obviously keep a separate health records file for yourself and your doctor, but a summary sheet can be included in your personnel file for reference purposes. This is especially useful if you lose your job… how much longer are you entitled to your benefits?
• Your financial contributions. To retirement (401k, IRA) or health insurance (life insurance), broken down monthly or yearly or both. How much have you kicked in? How much is your employer required to kick in? Have they done so? You might have to do this by hand yourself, but it’s also a good reference for you to help keep a gauge on how you’re doing with your long-term financial goals.
• Any formal proposals/memos/agreements you make with or submit to your employer. For example, a raise request, the proposal to create a new position/project or even a proposal to work from home.
• Grades/transcripts from college. Especially for younger professionals.
• Proof of attendance/completion of any training/seminar.
• Copies of awards or citations.
• Written references from previous employers or others related to your career.
• Termination documents from previous jobs. If only to prove/explain the circumstances of your leaving a previous position, these are good things to keep copies of.
• Business expenses. Travel expenses, mileage reports, rental car receipts, lunches, paper clips, etc.
• Warnings and/or other disciplinary actions/complaints with co-workers.

If you don’t have any or all of these documents, ask for copies to be made. You don’t necessarily need the originals for everything. Just having a copy in your own personal personnel file will suffice to provide all the reference and evidence you’ll ever need.

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