Depending on how your employer handles your severance pay, a severance package may or may not affect your UI benefits: the rules vary from state to state. If you received severance pay from your employer, you must report the amount you have received. In some states, the severance is considered income and may offset any unemployment compensation to which you are entitled. Your employer may choose to pay severance as a “lump sum”, or gradually over time. If you are being paid severance over time, this may be considered a “salary continuation”. Salary continuation, when you stay on the payroll for a certain number of weeks after you stop working for the company, will usually make you ineligible for unemployment for as long as the employer continues to pay your salary. If your employer pays you severance all at once in a lump sum, you may or may not be entitled to unemployment benefits. If the lump sum is just an upfront payment of a number of weeks of your pay, the agency may treat the payment like salary continuation. You will be ineligible for benefits for the number of weeks of severance you received. Apply for unemployment compensation even if you are receiving severance and. begin the paperwork immediately. If your severance runs out before you find another position, you can simply send in a request for compensation and the original administrative steps that you took will speed up the process of payment.