When companies issue layoffs, they may pay severance. If you have recently been laid off and are receiving severance payments, you may be wondering if you will still get to collect these checks when you find another job.
Ultimately, it will depend on the exact terms listed in your severance agreement. If you’re concerned about layoffs at your company, now is the best time to have a full understanding of severance payments and what to do if you lose your job.
Understanding Severance Pay
If you are being offered severance pay, you should know that you are lucky. Companies are not legally required to pay severance. Some will include this as a provision as part of your employment agreement, while others may offer severance packages when they issue layoffs.
Severance agreements help employees have a little extra financial stability when they are unexpectedly out of a job, while employers avoid legal claims that could be made against them after the termination. These severance pay agreements usually outline the official date of termination, how many weeks of payments you will receive, or if you’d prefer a lump sum, whether you will still have active benefits and the date those end, and the release of legal claims made against the employer.
Essentially, severance pay is intended to benefit both the employee and the employer. If this is something you are offered, it will be a huge relief in a time of major uncertainty. However, these payments will not go on forever, and there are conditions for when they will stop.
When Does Severance Pay End?
When you have a severance agreement, the conditions will be outlined that both allow for the receipt of pay as well as when that pay will end. For example, ongoing severance pay could be contingent upon you remaining as an employee of the company. If you start a new job, then this would be the end date for your old job, and typically, this is when your severance pay would end.
In some cases, employees may try to stay ahead of the curve when there is company turmoil by looking for new jobs. If you accept a new job before your old job was terminated, it could negate the severance agreement, making you ineligible to receive any money.
There are other times when you may lose out on severance if it is offered by your company, such as if you breach the agreement by suing your former company. If your former employer files for bankruptcy or goes out of business, you may not receive any more severance payments.
What You Should Do If You’re Currently Receiving Severance Pay or About to Undergo a Layoff
Whether you’ve been laid off or you have a feeling that your company will be making reductions to its employee force, there are a few proactive steps to take:
Review Your Severance Agreement
Check your employee paperwork and contract for a severance agreement. If there is one included, you should see which payments you receive, the time period, and the conditions of these terms. The key indicator is understanding how the agreement defines the date of termination. If you are still technically an employee while receiving severance, then it would likely mean accepting a new job during this window would put an end to the receipt of these payments.
If severance is part of a package the employer is offering upon termination, ask questions if there is any part of this contract you do not understand. It will help you move forward with greater confidence.
Review Your Financials
If you’ve found a new job, the start date at the new company could mean that it ends your benefits from the old company. Make sure you fully understand the financial impacts of this before signing on for the new hire date. Not understanding your agreement could be a very costly mistake.
Choose the Right Start Date
Congratulations on finding a new job that you’re eager to start, though they will usually ask you when you are available to start. Pick a date that minimizes disruption to the receipt of your severance payments. Ideally, you’ll coordinate it in such a way that you transition from the end of your severance period to a new job without missing a beat.
Follow the Rules
Some severance agreements will state that you can only receive severance pay as long as you are not employed by any other company. You do not want to try to sneak one past your old employer, as doing so is not only dishonest but also illegal. You will be made to pay that severance pay back, and the legal woes it will cause may even affect your new job.
Consult an Attorney
Contracts, particularly those involving severance, can be confusing. If you’re being given a severance contract during a layoff, you don’t want to miss anything in the fine print that could cause you issues down the road. It’s hard enough to understand these things, and when you’re worried about finding new work, you could use support from an employment law lawyer in Dallas.
Fully Understand Your Severance Pay Terms
In Texas and across the United States, there are no laws that mandate a company to pay severance to terminated employees. If you are being offered a severance package, it could make things much easier and less stressful when you look for a new position.
However, it is essential that you fully understand the terms set in this package. If your severance pay is designed to end in several months regardless of whether you take a new job or not, then you can move forward into a new position as soon as it is offered. In other cases, your severance pay will end on the start date of your new job. When the contract seems confusing or unclear, it is best to seek legal advice to ensure you’re not breaching the terms.
