Can You Receive Severance Pay After Being Fired?

Many people believe there is no difference between being fired and being laid off, but this is most definitely not the case. If you are fired from a position (as opposed to being laid off), you are generally not entitled to a severance package. Many companies will pay a fired employee for unused vacation time but nothing else, and sometimes not even that. The reason is that when you are fired, it is almost always for performance related issues or violation of company policy, and no company is going to compensate you further for doing a poor job. Even if you are fired for questionable reasons you will not receive a severance, though you are more likely to get unemployment benefits.

In you happen to be one of the rare employees these days who has a contract, you could receive a severance package after being fired if one is specifically stated as part of your contract. Even in this case, however, there may be language in the contract voiding or limiting the amount of the severance if you were fired for poor performance or a violation of company policies. If this situation applies to you, carefully review your contract to determine your eligibility for a severance package.

If you are laid off, however, there is nearly always compensation. A typical package would include continued healthcare coverage for a specific period (usually not to exceed 90 days), letters of reference, the opportunity to apply for future job openings with the company, and a week’s pay for each year you were with the company. This will vary from business to business, but something of this nature is the standard. The amount of severance you are entitled to should be specifically stated in your organization’s policy and procedure manual, so carefully check that against what you are offered to be sure you are not being short-changed.

If you were fired from your position, it is also important to note that receiving unemployment benefits is by no means guaranteed. Some companies choose not to contest unemployment filings by former employees, but many will fight to the end to keep their unemployment insurance premiums from rising. If you were fired for a legitimate reason, were given time prior to the termination to improve your performance, and the company has good documentation, there is a very good chance your unemployment claim will be denied.

As a manager, my experience has been that this depends greatly on the state Employment Hearing Officer that handles the case, so you should always file a claim. Some Hearing Officers take a very narrow reading of the term “misconduct,” and there have been some fired former employees who have been denied benefits while others have been approved, even though the cause for the firing, and the back-up documentation, were virtually identical. The only difference was the caseworker. Even if you don’t think you will be eligible for unemployment benefits after being fired, apply for them anyway. You’ve got nothing to lose.