COBRA, Your Partner in Severance Package Negotiation

Severance package is not mandated by law to be granted to dismissed employees or employees who resign. It is left to the sound discretion and will of both parties, meaning between the employer and the employee.

Once the employer agrees to the grant of a severance package during the start of the employment, an employee can bargain the benefits that should be included once the package is given.

One of the things that you, as employee, should bargain for is the assistance of the employer in helping you continue with your health insurance after the end of employment. Usually, the employer provides health insurance that ceases at the time you are severed from work. Thanks to Consolidated Omnibus Budget Reconciliation Act (COBRA), you may continue your current coverage as provided by your then employer.

With the help of COBRA, you can continue to be covered and provided with qualified health providers, medical, dental, vision and other medical expenses. Your employer could be helpful in this matter. If included in the severance package, your employer can include the necessary paper works and instructions so you can process the continuation of your health plan. Aside from this, your employer could pay the first few months of premium payments for your continued coverage.

It will do good to you and your family as well. Ultimately, the severance package is governed by laws on ordinary contracts. Hence, any benefits agreed upon by the employer to be provided to you once your employment is terminated are considered as law between you and your employer. Any breach later on is actionable in court.

Severance Package: Gratuity or Guilt?

No law requires employers to offer severance package to employees who are laid off. However, a lot of employers are offering severance package left and right to employees who they are going to forcefully lay off. The question now would be the intent or purpose for granting severance package.

An employee, at the same time, generally cannot rightfully ask for severance package if one is not offered to him or her by the employer. However, an employee can demand severance package in at least three instances: (1) when the employee is promised one either verbally or impliedly as when it is written in the employee handbook or manual; (2) when it is granted as part of the employment agreement; or (3) where it has been a long standing procedure to give severance package to employees of equal position or circumstance.

If you have been laid off and you have no right to a severance package but you are offered one, do not accept the severance package outright unless you are aware of the rights that you may be giving up in exchange for the package.

Usually, severance package includes small sums like a month salary’s worth. Others grant packages to include insurance benefits and other gratuities. There is no standard amount or package unless stipulated.

In case you were laid off and a severance package is dangled in front of you, ask yourself if you feel that your employer has wronged you in any way.