Severance

bbarrett

I just wanted to ensure I am correct. The difference between a severance package and wages in lue of notice. Wages in lue of notice only allows an employee to file an unemployment claim till after the last payment. For example we term some on today and give them 30-day wages in lue of notice. They can’t file an unemployment claim till after the 30 days?

Thanks for any feedback.

franfields

When we have severance from a RIF, we pay it out, following the regular pay schedule. They don't file unemployment until their severance has been paid out. Hopefully, by then they have found another job and moved on with their life.

hrbanker

We have done severance packages both ways: a one time payment or payments over a period of time. When someone files for unemployment, the bureau asks us if the employee is receiving any payments after their final day of work, and how those payments are allocated. --If they are receiving accrued vacation pay or a one time payment, those are allocated to time worked. They can begin drawing unemployment compensation as soon as their claim is approved.

If the person is being paid severance over a time period (let's say 2 months), we pay them over the two month period. We inform the bureau that these payments are allocated to the two months after their job ended and they can begin collecting unemployment after those payments run out.

If we are terminating employment for any reason except gross misconduct, we pay 2 weeks wages in lieu of notice. It gives them a little bit to fall back on. In Ohio, if the terminated employee was let go for policy violation or otherwise not giving the employer a 'best effort', they are not eligible for unemployment comp.

Don D

Your answer lies in Texas law. Each state has its own UI regulations and laws established by its legislature. In my state, for example, severance and vacation pay and holiday pay have no impact on unemployment insurance eligibility, only wages for time worked does. Pay in lieu of notice has no relevance to our state UI regulations either. Typically, a person in this state can be monetarily eligible (if otherwise eligible) following the week in which their employment ended, with the filing week being a 'waiting period' week during which no benefits are received. Call your Workforce Commission for a definitive Texas procedure.

System

Don is right to point you to the Workforce Commission. I think they'll confirm that the ee is disqualified for benefits for a "benefit period" in which the ee received wages in lieu of notice.

Lola815

I actually had an employee come back to me and complain that we gave him too much severance pay and that he was mad at us because it screwed up his unemployment benefits! I was absolutely floored!!! Sorry, that didn't help to answer your question, just wanted to share.