Designing a severance plan. Determining the amount of a severance payment is a business decision a company will need to consider. One of the most important factors in this determination typically is the number of years an employee has served the company. Employees with several years of service ordinarily receive more money, as do high-ranking executives. In all cases, a company should carefully consider what it has done in the past, as well as the circumstances surrounding any current severance decision.
Employers can make severance payments in lump sums or in periodic payments.
When made periodically, the payments can be paid from payroll. A company can structure periodic payments to end when the former employee secures a new job. Severance payments generally are taxable and subject to withholdings. Also, the receipt of severance payments generally does not affect a former employee s eligibility to receive unemployment benefits. Thank you for visiting the Beard St. Clair Gaffney McNamara PA Web site.