Severance Pay
Calculator
There is no federal law requiring severance pay, but most mid-to-large companies offer it — and the terms are almost always negotiable. A typical package ranges from one to four weeks of pay per year of service, but factors like your role, industry, reason for separation, and state employment laws all affect what you should expect. This free calculator estimates a fair severance range so you know whether to sign or negotiate.
Important: This tool provides educational estimates only — not legal advice. Made For Law is not a law firm and is not affiliated with, endorsed by, or connected to any federal, state, county, or local government agency or court system. Calculator results are based on statutory formulas and publicly available fee schedules — not AI. Supporting content is AI-assisted and editorially reviewed. Results may not reflect recent legislative changes or your specific circumstances. Do not rely solely on these estimates — always verify with official sources and consult a licensed attorney before making legal or financial decisions. Full disclaimer
Estimate Your Severance Pay
Enter your salary, years of service, and industry to see an estimated severance range. If you are a federal employee, compare the result with the OPM severance pay estimation worksheet because federal severance uses basic pay, creditable service, age adjustment factors, and biweekly severance rules.
Federal Severance Pay Estimation Worksheet
Federal employee severance pay is not the same as a private severance package. OPM rules use a basic severance pay allowance tied to the employee's rate of basic pay, annual rate of basic pay, completed years of creditable federal service, and age adjustment factors. This severance pay calculator can help organize the same inputs before you compare the result with an agency worksheet or an OPM benefits estimate.
To calculate severance pay under the OPM worksheet, start with one week of pay at the rate of basic pay for each completed year of service through 10 years. Add two weeks of pay for each completed year of creditable service beyond 10 years, then add 25% of the applicable weekly amount for each full 3 months of creditable service beyond the final full year. An employee age over 40 years may receive an age adjustment allowance that augments the basic severance pay by 2.5% for each full 3-month period over 40.
Basic severance pay
The common OPM starting point is one week of pay for each full year of service through 10 years, then two weeks of pay for each full year over 10 years.
Rate of basic pay
Use the annual rate of basic pay, not overtime, bonuses, travel reimbursement, or unrelated allowances, when estimating the federal severance amount.
Creditable service
Federal service, completed years, partial years, and whether a break in service changes eligibility can affect the severance calculation.
Age adjustment
Older federal employees may receive an adjusted severance amount because OPM age adjustment factors can increase the severance pay allowance.
Biweekly severance
Federal severance is often paid in biweekly severance payments until the total severance pay allowance is exhausted or eligibility stops.
Eligibility limits
A federal employee may lose eligibility for severance if they qualify for an immediate annuity, decline a valid placement, or return to covered federal service.
If you were involuntarily separated from federal service, check the agency notice, SF-50, OPM worksheet, retirement eligibility, and whether the separation is tied to a reduction in force. The calculator can estimate severance pay, but the agency decides whether you are eligible for severance pay under federal service rules.
The severance pay calculator is based on salary, year of service, and policy assumptions, but federal termination pay has separate rules. OPM asks whether full-time and part-time employees are involuntarily separated from federal service and meet specific eligibility for severance pay. The worksheet assumes creditable service through 10 years earns one week of pay per year, less than 10 years is handled differently than service above 10 years, and 10 years of service is the point where additional weeks of severance pay begin to increase.
Severance pay is calculated before taxes. Total severance pay is subject to federal income tax, Social Security, Medicare, and withholding, so receiving severance may create a higher tax bracket temporarily. An employer treats severance as supplemental wages or sometimes severance as regular wages; either way, severance pay includes taxable additional pay. Severance pay and unemployment benefits serve different purposes, and unemployment rules can affect when you receive severance or receive severance pay.
For the official worksheet, see the OPM severance pay estimation worksheet.
Severance Pay Calculator Inputs That Change the Offer
A severance calculator should estimate more than base salary weeks. The real package depends on what the employee gives up in exchange for signing: legal claims, confidentiality, non-disparagement, cooperation, non-solicitation, return of property, and sometimes new post-employment restrictions.
A well-structured severance policy should explain the severance period, the total severance amount, final severance amount after offsets, tax implications, tax burden, tax requirements, and whether the employer is required to stipulate severance in writing. Private employers rarely have a federal law that require severance pay, but state law, WARN notices, contracts, and past practice can affect severance benefits and how much severance pay is reasonable.
Cash value
Base severance, bonus proration, commissions, PTO payout, WARN pay, salary continuation, and any separate final paycheck obligation.
Benefits value
COBRA subsidy, life insurance continuation, outplacement help, immigration sponsorship support, equity vesting, and reference language.
Legal leverage
Age, disability, pregnancy, retaliation, whistleblower, unpaid wage, WARN, and contract claims can justify a higher counteroffer.
Restrictions
Non-compete, non-solicit, confidentiality, clawback, cooperation, release scope, and non-disparagement terms may be worth negotiating.
What a Severance Package Typically Includes
Base Severance Pay
Usually 1–4 weeks of salary per year of service. Senior employees and executives often receive more. Can be paid as a lump sum or salary continuation.
Health Insurance (COBRA)
Many packages include continued health coverage for 3–18 months, either fully paid by the employer or subsidized at COBRA rates. This benefit alone can be worth thousands.
Unused PTO Payout
Some states require payout of accrued vacation regardless of severance. Others leave it to company policy. California, Illinois, and Massachusetts mandate PTO payout.
Non-Compete & Release Terms
Severance often requires signing a release of legal claims and may include non-compete or non-solicitation clauses. The broader the restrictions, the more you should negotiate.
Outplacement Services
Career coaching, resume writing, and job placement assistance. Ranges from a few hundred dollars to executive-level programs worth $5,000–$25,000.
Stock & Equity Acceleration
For employees with unvested stock options or RSUs, accelerated vesting can be the largest part of a severance package.
What to Check Before You Sign a Severance Agreement
A severance pay calculator gives you a starting number, but the written severance agreement determines the real value of the package. Review every payment, deadline, benefit, and restriction before you sign a release of claims. The employer is usually buying certainty: your promise not to sue, not to disclose confidential information, not to disparage the company, and sometimes not to compete or solicit customers.
Build your counteroffer around salary, years of service, unused PTO, final paycheck timing, health insurance costs, stock options or RSUs, bonus eligibility, commission payouts, unemployment impact, and the tax treatment of a lump sum versus salary continuation. If the agreement includes broad confidentiality, nondisparagement, noncompete, nonsolicitation, cooperation, clawback, or release language, ask for narrower terms or more severance pay in exchange.
Money and benefits
Confirm the gross severance amount, payment date, withholding, accrued PTO, bonus or commission treatment, COBRA subsidy, life insurance, disability coverage, and whether salary continuation affects unemployment benefits.
Equity and incentives
Check stock option exercise deadlines, RSU vesting, option acceleration, deferred compensation, sales commissions, retention bonuses, and whether termination changes your rights under the equity plan.
Legal rights
Review the release of claims, OWBPA review period for workers 40 and older, WARN Act language, confidentiality, nondisparagement, noncompete, nonsolicit, arbitration, venue, and attorney fee provisions.
When Severance Is Effectively Mandatory
The Worker Adjustment and Retraining Notification (WARN) Act is the closest thing to a federal severance law. It doesn't require severance directly, but the penalties for non-compliance effectively create one.
WARN Act Requirements
- Who it covers: Employers with 100+ full-time employees (or 100+ employees working 4,000+ combined weekly hours)
- When it triggers: Plant closings affecting 50+ workers, or mass layoffs affecting 500+ workers (or 50–499 workers if they represent 33%+ of the workforce)
- What's required: 60 calendar days' written notice to affected employees, unions, and state/local government
- Penalty for violation: Up to 60 days of back pay and benefits for each affected employee — effectively functioning as mandatory severance
State Mini-WARN Acts
| State | Threshold | Notice Period | Key Difference |
|---|---|---|---|
| California | 75+ employees | 60 days | Lower employee threshold; covers relocations |
| New York | 50+ employees | 90 days | 90-day notice (vs. federal 60); lower threshold |
| New Jersey | 100+ employees | 90 days | 90-day notice; severance pay of 1 week/year required |
| Illinois | 75+ employees | 60 days | Lower threshold; covers part-time workers |
| Tennessee | 50–99 employees | 60 days | Fills gap for smaller employers |
| Wisconsin | 50+ employees | 60 days | Lower threshold than federal WARN |
Severance Pay by Industry
Severance norms vary significantly by industry. These benchmarks represent typical packages for mid-level employees with 5+ years of tenure.
| Industry | Typical Package | Notes |
|---|---|---|
| Technology | 2–4 weeks/year | Often includes extended stock vesting, outplacement services |
| Finance & Banking | 2–4 weeks/year | May include deferred comp, bonus proration; heavily regulated |
| Healthcare | 1–2 weeks/year | Non-competes common; negotiate scope and duration |
| Manufacturing | 1–2 weeks/year | WARN Act frequently applies; union agreements may govern |
| Retail & Hospitality | 1 week/year | Less common for hourly workers; management packages vary |
| Legal & Professional Services | 2–3 weeks/year | Partnership buyouts differ from employee severance |
| Government & Nonprofit | Varies | Often follows civil service rules or board policies |
| Executive / C-Suite | 6–24 months | Usually pre-negotiated in employment contract (golden parachute) |
When and How to Negotiate Severance
- 1You have potential legal claims.
Age discrimination, wrongful termination, or retaliation claims give you bargaining power — the release in the severance agreement has real value to the employer. This is your strongest negotiating position.
- 2You hold institutional knowledge.
If you're in a senior role or hold critical client relationships, the company may offer more to ensure a smooth transition and your cooperation during handoff.
- 3The initial offer is below benchmarks.
If the offer is less than 1 week per year of service, it's worth countering — especially if you're being asked to sign a broad non-compete or waive significant legal rights.
- 4You're over 40 — use OWBPA protections.
The Older Workers Benefit Protection Act requires a 21-day review period (45 days in group layoffs) and a 7-day revocation window. Use that time to consult an employment lawyer. The company can't pressure you to sign early.
- 5Negotiate non-monetary terms too.
Extended health insurance, positive reference language, outplacement services, non-compete limitations, and stock vesting acceleration can be worth as much as additional cash. Companies are often more flexible on these items.
Frequently Asked Questions
Edited and reviewed by our editorial team. Answers are general information — not legal advice.
Is severance pay required by law?
No federal law requires employers to pay severance. However, the federal WARN Act requires 60 days' notice for mass layoffs — and employers who fail to provide notice often pay 60 days of wages as severance instead. Some states have mini-WARN acts with stricter requirements. Beyond legal requirements, most mid-to-large companies offer severance as standard practice.
How much severance should I expect?
Private employers often use 1–2 weeks of pay per year of service. Federal employee severance pay is different: OPM uses a basic severance pay allowance based on years of creditable federal service and an adjusted severance calculation that can include age adjustment factors. Senior employees and executives often negotiate monthly severance packages instead of a fixed worksheet formula.
How is federal employee severance pay calculated?
Under OPM rules, basic severance pay starts with one week of pay for each full year of creditable federal service through 10 years, plus two weeks of pay for each full year over 10 years. The calculation uses the employee's rate of basic pay, annual rate of basic pay, completed years and partial years of service, and any applicable age adjustment. Biweekly severance payments usually continue until the total severance pay allowance is paid or eligibility ends.
Who is eligible for federal severance pay?
A federal employee generally must be involuntarily separated from federal service, have enough qualifying service, and not be immediately eligible for an annuity or another position that ends eligibility. OPM rules are technical, so this calculator is a planning worksheet rather than a benefits determination.
What is the WARN Act and how does it affect severance?
The Worker Adjustment and Retraining Notification (WARN) Act requires employers with 100+ employees to give 60 days' written notice before plant closings or mass layoffs affecting 50+ workers. Employers who violate WARN owe affected employees up to 60 days of back pay and benefits — essentially becoming mandatory severance.
Can I negotiate my severance package?
Yes — almost always. Severance agreements are contracts, and the initial offer is rarely the best one. You are in the strongest position if you have potential legal claims (age discrimination, wrongful termination), institutional knowledge the company needs during transition, or an offer that falls below industry benchmarks. An employment attorney can help maximize your package.
What should a severance package include?
A severance package often includes lump-sum or continued salary payments, health insurance continuation (COBRA subsidy), unused PTO payout, outplacement services, stock option acceleration, bonus proration, and a non-disparagement clause. You should also negotiate the scope of any non-compete or non-solicitation clauses.
Is severance pay taxed?
Yes — severance pay is taxed as ordinary income. Federal income tax, Social Security, and Medicare taxes apply. If you receive a lump sum, it may push you into a higher tax bracket for that year. Some employees negotiate to have severance paid over time (salary continuation) to spread the tax impact across multiple tax years.
Can I collect unemployment while receiving severance?
It depends on your state. Some states allow you to collect unemployment immediately regardless of severance. Others offset unemployment benefits by the severance amount or require you to wait until severance payments end. Lump-sum payments are generally treated more favorably than salary continuation for unemployment purposes.
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