An employee who is terminated and provided with severance pay from a company may also be entitled to unemployment compensation.  The qualification is that the severance pay cannot extend the employee’s employment.  For instance, an employee whose severance agreement provides that they will be kept on payroll for an additional time period is not entitled to unemployment compensation.  Companies may do this in order to keep the employee on the company’s health insurance plan.

Consequently, employees who would like to collect unemployment compensation and severance pay should request that the severance be paid in a lump sum.

February 25, 2010 - Tom McKinney - Castronovo & McKinney - Severance Attorneys