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Commonly asked questions about employee severance packages

Manufacturing, information technology (IT), petroleum and other industries operate in Texas. While these industries provide jobs to many Texans, there’s no guarantee these positions will last forever. In a few situations, a company’s former employees can and should receive severance packages once their time with a business ends.

Is every employee entitled to a severance package?

Unfortunately, no. Whether or not you receive a severance package depends on the terms of your employment contract. Under Texas law, companies don’t have to provide severance packages. However, employers risk contract breaches and other employment law issues if their contracts require severance benefits. Businesses must also provide severance packages when employees receive no warning about layoffs.

Accepting a severance package

Typically, accepting a severance package comes with terms. Companies sometimes award severance packages only if former employees agree not to sue these businesses. Other businesses might require former employees to remain quiet about the end of their employment.

Employers control severance packages

Since there are no legal requirements to provide severance pay to employees, companies set severance pay amounts. Typically, companies base severance pay on how long an employee has been with a company and their current salary. For example, someone let go after a few weeks likely won’t receive severance pay. However, a long-standing executive may receive a severance package worth several million dollars.

Potential severance pay structures

Besides potentially continued health benefits, most ex-employees want to know how much severance pay they’ll receive. A company generally pays one to four weeks of severance compensation for each year of an employee’s service. Look for a former employer’s severance pay rates in your contract or other employee-related documents.

In certain situations, former employees must receive severance pay. If your employer goes back on their word, you can pursue legal action against this business.