Collecting Unemployment & Severance Packages
Unemployment benefits and severance packages are both financial instruments that people tap into when they lose a job. However, there are many differences between the two. Despite their differences, both unemployment benefits and severance packages are funded by the employer and have stipulations on them, based on how your job was terminated.
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Responsibility
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The responsibility of funding the severance and unemployment accounts for each worker falls on the employer. State laws require employers to make contributions into an unemployment insurance account monitored by that state. There are usually exemptions based on workforce size. Severance payments, however are purely voluntary. They are often written into employment contracts and used as a bargaining chip for those in skilled, professional positions.
Payouts
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Unemployment benefits are not automatically paid upon losing your job. You must apply for them by contacting your local employment security agency. Most states require a one-week waiting period before you receive your first weekly benefit payment. They also have a cap on the amount of unemployment benefits that you can receive each week and on the length of time that you can receive benefits.
Severance packages are paid in one lump sum upon termination or in monthly payments. The amount of the severance is predetermined as an amount or percentage of your salary. Each employer determines the amounts of the severance.
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Competing Payments
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Some people wish to file for unemployment benefits despite being eligible for severance funds.
If you receive a lump sum payment from severance, it may be possible to also receive unemployment benefits. However, monthly severance payments will affect your eligibility for unemployment benefits.
Re-employment
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Upon finding a job, you may become ineligible for unemployment benefits. The job must be suitable to your work experience, salary and location (for commuting). Based on these factors, the employment security agency will decide whether you are no longer eligible for unemployment benefits or if you are only eligible for partial benefits. Severance packages are unaffected by the new job, unless otherwise stated in the employment contract or severance agreement.
Voluntary Unemployment
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People who quit their jobs or are terminated because of an obvious violation of company policy (like theft) are ineligible for unemployment benefits and often severance packages, depending on the terms of their severance package and the circumstances surrounding the termination.
Considerations
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Contact the employment security agency to renew, recertify and/or report once in a given period (perhaps every week or every other week) that you wish to receive benefits. Every state has a survey-like document you must complete. The document tells the agency that you are still unemployed, laid off or working part-time. It also includes a place to disclose any earnings from work of any kind and the contact information for places you have visited in your search for another job. There are other questions included to determine whether you are still eligible for benefits each week. Be truthful to avoid loss of benefits and/or fraud charges.
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