What Should Be Included in a Layoff Package?

What Should Be Included in a Layoff Package?

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What Should Be Included in a Layoff Package?

Negotiating the salary and benefits is one of the first things that comes to the minds of most people when they receive a job offer. That's understandable; in such situations, they want to take care of their best interests before signing the contract. But what most people don't realize is that salary and benefits aren't usually the only negotiable aspects of employment. On the contrary, it is possible to negotiate a layoff package.

But to negotiate this package, it's important to understand what it should include. In this article, we'll discuss a standard layoff package, covering what it should entail and everything else you need to know about it.

Elements of a Layoff Package

A typical layoff package should include the following:

The Severance Pay

The amount of severance pay you may be able to negotiate will depend on several factors, such as how long you've worked with the company, your position at the company, and the impact of the job loss on your lifestyle. In most cases, employees are offered one to two weeks for every year worked. However, as mentioned before, this amount could be more depending on the circumstances.

It's always advisable to negotiate at least four weeks of severance pay for each year worked. You can even opt for a higher number and find out what your employer thinks.

Retirement Plans

It's also important to ensure that your retirement plan is included in the package. The specifics of the retirement plan will depend on your employer's policy and state laws. For this reason, ensure you obtain a copy of your employer's policies and then have them reviewed by an experienced attorney.


You may be able to extend the insurance coverage provided by your employer as you look for a new job. This extension might cover disability, health, life insurance, and more. In most jurisdictions, employers may be able to extend their coverage for up to 18 months or even longer under certain circumstances. Before signing the package, make sure you find out what will happen to your insurance coverage once you part ways with your employer.

Recommendation Letter

You may also ask your employer to write you a recommendation letter. This will come in handy when looking for a new job.

Company Property

If you're in possession of company property, such as a laptop, make sure you find out what the company wants you to do with them. If they want you to keep it, you must obtain this consent in writing. The last thing you want is to be accused of illegally possessing company equipment and then fail to prove that your former employer allowed you to do so.

Eligibility for Unemployment Benefits

You may be entitled to unemployment benefits when you lose a job. However, to receive these benefits, you must meet certain eligibility requirements. Most of these requirements are the same regardless of your state. That said, many states have unique requirements every individual must follow when applying for unemployment benefits.

Generally, to be eligible for unemployment benefits, you must:

  • Have worked a certain number of hours a year – this requirement varies from state to state
  • Have worked in the state for a specified period, usually the last 12 months
  • Have met your state wage guidelines for individuals applying for unemployment benefits
  • Be seeking work even as you receive unemployment benefits
  • Be able to work
  • Be willing to work immediately when such an opportunity arises
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Get answers to commonly asked questions about our legal services and learn how we may assist you with your case.

  • What's the Purpose of a Severance Package?

    Employers offer layoff packages to their former employees for different reasons. These reasons include and are not limited to:

    A Gesture of Goodwill

    An employer might offer a layoff package as a sign of goodwill. This mostly happens when the reason for terminating the employment relationship is beyond the employer's control. In that case, they may feel inclined to ensure that their former workers have a smoother experience transitioning into a new job.

    To Beat Competition

    With the increasing competition in the business world, employers might decide to offer layoff packages to their employees when it's time to part ways. Such a gesture will likely improve the company's image, making it popular among clients, workers, shareholders, and the general public. And when businesses have a good reputation, especially for treating their workers with respect, it increases their popularity among the masses.

    To Avoid Lawsuits

    A severance package can help an employer avoid expensive lawsuits from former employers. This usually happens when the employer violates labor and employment laws with regard to that particular employee. For example, suppose you were fired unlawfully. In that case, your former employer might offer an enticing layoff package.

    In exchange, you agree to waive your right to take legal action against the employer. In addition, you also agree to avoid discussing or revealing anything negative about the employer.

    To Protect the Employer's Best Interests

    Some employers offer layoff packages to their best employees when they decide to part ways. In most cases, the main purpose of offering these packages to their best (former) employees is to serve the company's best interests.

    For example, let's say you're the best marketing manager the company has ever had. When they decide to part ways with you for any reason, as long as it is not illegal, they may want you to sign a layoff package that includes a 'non-compete clause.'

    This means you cannot seek employment from another company in your field, usually a direct competitor. Employers do this because they know losing their best workers to rival businesses could weaken the employer.

    It's also important to note that employers might use different terms to describe a non-compete agreement. Therefore, employees should understand these terms, including what they represent. Examples of terms that describe non-compete agreements include non-compete clauses or restrictive covenants. 

  • Should I Accept a Layoff Package From My Employer?

    Although layoff packages are usually offered as a sign of goodwill, most of these packages come with a lot of strings attached. For this reason, you should never be in a rush to sign them.

    Instead, do the following:

    Read and Understand the Package

    Before signing (or deciding not to sign) the package, it's important that you read and understand its contents. Don't let your employer explain to you what the package contains without letting you read and understand it. Although your employer might not have ill intentions, it's always better to be safe than sorry.

    Earlier, we discussed that some employers might offer this package to cover up for various labor and employment law violations. For this reason, you need to understand why exactly they're offering this package to you. Specifically, think about how the employer has been treating you over the past few months.

    Was the employer mean to you? Did they make any discriminatory remarks? Did you participate in any protected activities that would have attracted your employer's wrath?

    In short, don't assume that the only reason your employer is offering this package is that they care about you. Half of the time, it's because they care more about themselves and the company.

    Remember You Have Time

    You shouldn't accept (or reject) the package right away after receiving it. Rather, you should always bear in mind that time is on your side. In most cases, you have up to 21 days to respond to the package. Therefore, it's okay to request more time to review the package before responding.

    Some employers may not want you to take the time to review the package. This is because they know anything could happen within the 21 days or the specific timeframe you have to respond.

    Therefore, they'll try to make it look like it's extremely urgent. The truth is, you don't need to respond immediately when you receive the package. Remember, time is on your side even if your employer says otherwise.

  • Should I Consult an Experienced Employment and Labor Attorney?

    It's always advisable to consult a seasoned labor and employment attorney. This is especially important if you don't understand the terms of the agreement. In some cases, employees might use technical terms throughout the agreement. This tactic is meant to discourage the reader from reading through the entire document or trying to discover what these terms mean. As a result, chances are they'll sign an agreement they don't understand.

    An experienced attorney will review the specific circumstances of your case and compare it with the layoff package offered by your employer. Throughout the time, the question of whether the package is worth it will surface. Your attorney will want to find out whether your former employer offers this package out of goodwill or to hide something even bigger.

    But what could they possibly be hiding from?

    Suppose your employer decides to terminate your employment contract because of your race. This is illegal. According to labor and employment laws both at the federal and state level, employers cannot terminate their employers based on various protected characteristics.

    These characteristics include but are not limited to:

    • Race
    • Nationality
    • Religion
    • Sexual orientation
    • Disability
    • Certain health conditions such as pregnancy

    In addition, your employer cannot terminate you for participating in certain protected activities. These activities include but are not limited to:

    • Refusing to participate in illegal activities in the workplace, such as misclassification of employees
    • Agreeing to cooperate with investigators probing your employer's conduct
    • Raising the alarm over certain violations in the workplace
    • Defending or speaking up on behalf of certain employees whose rights have been violated
    • Agreeing to join a labor union

    Remember, most employers understand how labor and employment law work. Some even have attorneys to advise them on how to proceed with such issues.

    For example, if your employer fires you because you participated in a particular protected activity, their attorneys might advise them to cover up this violation by offering a layoff package. Remember, as we discussed earlier, most of these packages require the employee to waive their right to pursue legal action against the employer.

    Therefore, when you agree to sign the package and later discover that your employer violated your rights, you cannot take legal action against them. This would be a violation of the contract between you and the employer. In most cases, it won't matter even if the court finds out that your employer broke the law. The presence of this agreement, coupled with the fact that you agreed to sign it, releases your former employer from any responsibility.

  • Could Your Case Might Be More Lucrative Than the Layoff Package?

    One of the reasons your employer might want you to sign the package immediately is because they don't want to give you enough time to hire an attorney. They know that if you get the chance to hire an attorney, you will discover that your case is more valuable than the layoff package.

    This is because experienced labor and employment attorneys are good at evaluating these cases. By listening to your side of the story and reviewing the available evidence, they may be able to help you take legal action against your employer. This only works if you haven't yet signed the layoff agreement.

    A seasoned attorney can also help maximize your claim. You'll be surprised to learn that you are entitled to damages you didn't even know about. The whole point of having an attorney is to understand your legal rights and get help pursuing justice.

  • Where Can I Find the Best Labor and Employment Attorneys?

    Morgan and Morgan has some of the best employment and labor attorneys in the country. In fact, our attorneys file the most employment litigation cases in the country.

    If you've been offered a layoff package and you feel there's a hidden motive, fill out our free consultation form. Our legal representatives will review your case and let you know if you have a valid claim and how to proceed.

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