3 ms·

A month's severance is a lot cheaper than paying for unemployment benefits.

• jrs235 10y ago
  From my understanding, and this will vary from state to state since unemployment insurance is managed and dealt with by states, not the federal government, employees would still possibly be able to collect unemployment after that month of severance runs out if they are unable to get a new job (and are actively looking) and the unemployment claims will still ding IBM. That month of severance offsets their unemployment insurance rate increase(s). IBM is hoping folks can find a job in the next four months so they don't have to pay any out. Additionally, I would assume, part of accepting the severance might require the employee signing papers which state that the end of employment is voluntary and agreed upon possibly invalidating the employees claim to unemployment and thus hurting IBM's insurance rates. Whether that applies or works will depend on numerous factors, particularly the state the employment occurred in.
  • Consultant32452 10y ago
    The relevant statute is called the WARN Act, Worker Adjustment and Retraining Notification. This requires 60 days notice (or 60 days pay) among other things. https://www.doleta.gov/layoff/pdf/WorkerWARN2003.pdf https://www.doleta.gov/layoff/pdf/WorkerWARN2003.pdf
• andrei_says_ 10y ago
  Does a months severance pay eliminate the need to pay for 6+ months of unemployment?
  • markbnj 10y ago
    No, in my experience accepting a severance payment does not prevent you from claiming unemployment benefits, however the severance is treated as salary and you can't collect benefits until however many pay periods it represents have passed.