Several people asked about what's the average, or typical severance package (2023) at the manager level, director level, VP, executive level, or C-level, or even for individual contributors like software engineers with 20-30 years of experience.
I know people who got laid off from the firms like Google, Amazon & Microsoft and I thought sharing this experience might help others to understand the typical severance package even better.
Note that I am not a lawyer, and I just requested the Dataneb team to publish this content so that others might find it useful.
Factors that Decide Severance Package
It's a very broad topic when it comes to estimating someone's severance package. It depends upon several factors like the level of seniority, years of service in the industry, firm size, your contract, company policies, job performance, and even some extent to negotiation.
However, in general, the benefits provided through the severance package are the same for all employees. The only variation would be in the final severance pay calculation, assuming there was no distinct severance agreement when you initially signed and accepted the offer letter.
Related: H1B grace period with severance pay
If an employee had a severance agreement in place when signing the offer letter, the situation becomes distinct, and it becomes challenging to determine the specific benefits each individual employee is receiving.
The benefits offered in the average severance package 2023 have been also shrinking as compared to what was offered a few years back, for example, the standard was typically one month of pay for each year of service, but now it has been reduced to two weeks of pay for each year of service. In certain cases, some companies have even further lowered it to one week of pay for each year of service.
Severance packages are often not a common topic of discussion during the offer letter signing process for most individuals, but past situations like COVID and recent mass layoffs have prompted individuals to think about it.
The severance package calculation would depend upon multiple factors listed below. However, whether you are at the VP level, a manager, an executive, or a director, the severance benefits structure would remain the same.
Employee's years of service and seniority: Typically, the longer an employee has worked for the company, the more severance pay they may receive as recognition of their loyalty and contribution.
Industry: Different industries have different standards for severance pay, and some may offer more generous packages than others. The following table shows the average annual salary range of VPs across various industries.
Industry | Average Annual Salary Range |
Technology | $300,000 to $600,000 |
Finance | $250,000 to $700,000 |
Healthcare | $200,000 to $500,000 |
Consumer Goods | $200,000 to $400,000 |
Manufacturing | $150,000 to $350,000 |
Marketing | $150,000 to $350,000 |
Education | $150,000 to $300,000 |
Non-Profit | $100,000 to $250,000 |
Related: How to renew an Indian passport in the US?
Company size: Larger companies may have more resources to offer larger severance packages, while smaller companies may not have as much financial flexibility.
Terms of the employment contract or company policy: Some employment contracts or company policies may outline specific severance pay, while others may leave it up to negotiation or offer none at all.
Reason for termination: The reason for termination can impact the amount of severance pay offered. For example, employees laid off due to company restructuring may receive more significant severance pay than those terminated for poor job performance.
Employee's job performance: An employee's job performance can impact the amount of severance pay offered. Those who perform well may be offered a more generous package than those who do not. Again, ultimately it's the company who will be deciding these factors unless you have signed an explicit severance agreement.
Potential legal disputes or litigation: Employers may offer a more substantial severance package to avoid potential legal disputes or litigation related to the employee's termination.
Market conditions in the industry: The market conditions in the industry can impact the amount of severance pay offered, as companies may need to offer more to attract or retain talent.
Negotiation between employer and employee: Severance packages can often be negotiable, and both the employer and employee may need to compromise to reach an agreement that is satisfactory to both parties.
Average Severance Package Examples
01. Meta Severance Package
In Nov 2022, Facebook/ Meta laid off approximately 11,000 employees which constituted 13% of their workforce. Meta severance package included:
Severance pay. We will pay 16 weeks of base pay plus two additional weeks for every year of service, with no cap.
PTO. We’ll pay for all remaining PTO time.
RSU vesting. Everyone impacted will receive their November 15, 2022 vesting.
Health insurance. We’ll cover the cost of healthcare for people and their families for six months.
Career Services. We’ll provide three months of career support with an external vendor, including early access to unpublished job leads.
Immigration support. I know this is especially difficult if you’re here on a visa. There’s a notice period before termination and some visa grace periods, which means everyone will have time to make plans and work through their immigration status. We have dedicated immigration specialists to help guide you based on what you and your family need.
Severance Pay Calculation
For example, if you have experience of 20 years laid off as VP, director, executive, or manager, in the above case your severance pay will be 2 weeks for every year of service which will be 40 weeks + 16 weeks of base pay = 14 months of pay as there is no cap.
Related: How to apply for a US passport for the newborn?
In addition, if you have PTO time that will add. Let's assume for this example you have a month (4 weeks) of PTO while laid off. Next will be your bonus or RSU vesting contributing to severance pay.
So, you will end up having (14 + 1) months of pay + bonus/RSU vesting = This will be a minimum of half a million dollars or more if you are a manager, VP, director, or executive. Base pay for these levels would vary between the range of 200K to 600K, plus add roughly a 35% to 55% bonus on top of it.
If you can find a new job within a month or two of layoff, this severance pay is like a lottery ticket. Well, losing a job is not a good feeling, but in the end, if you can find a new job quickly why not?
Annual Salary | Estimated Severance Pay (6 to 18 months) |
$200K | $100K to $300K |
$300K | $150K to $450K |
$400K | $200K to $600K |
$500K | $250K to $750K |
$600K | $300K to $900K |
$700K | $350K to $1.05M |
$800K | $400K to $1.2M |
$900K | $450K to $1.35M |
$1M | $500K to $1.5M |
Related: How to expedite green card processing?
02. Google Severance Package
In Jan 2023, Google announced that it would be laying off 12,000 employees roughly 12% of its workforce in the US. Google offered severance packages that
Severance pay. We will pay employees during the full notification period (minimum 60 days).
Vesting. We will also offer a severance package starting at 16 weeks' salary plus 2 weeks for every additional year at Google, and accelerate at least 16 weeks of GSU (Google Stock Units) vesting.
PTO. We will pay 2022 bonuses and the remaining vacation time.
Health Insurance & Immigration Support. We will be offering 6 months of healthcare, job placement services, and immigration support for those affected.
Outside the US, we will support employees in line with local practices.
03. Uber Technologies Inc.
In 2019, Uber Technologies Inc. offered a severance package to about 400 of its marketing employees as part of a company-wide restructuring effort. The package included:
Severance pay. A minimum of 10 weeks of severance pay is based on the employee's tenure at the company.
PTO. Payment for accrued but unused vacation time and sick time.
Healthcare. Continued healthcare coverage for some time, with the option to continue healthcare coverage at the employee's own expense after that.
Immigration support. Outplacement services to help employees find new jobs.
Uber's severance package was relatively generous compared to some other companies' packages, especially given the company's size and financial situation at the time.
04. Verizon Severance Package
In 2018, Verizon announced plans to offer a voluntary severance package to about 44,000 employees as part of a cost-cutting effort. The package included:
Severance pay. Up to 60 weeks of pay based on the employee's years of service and salary level.
PTO. Payment for accrued but unused vacation time.
Healthcare. The employee will be provided with healthcare coverage for a particular duration and will have the choice to continue the coverage at their own cost beyond that period.
It's important to note that severance packages can vary widely depending on the specific circumstances of each employee's departure and the company's financial situation. These examples are provided as general illustrations of what severance packages may include.
Related: How to apply for an OCI card?
Components of Severance Packages
These are some common elements that might constitute a severance package, but not necessarily all of them.
Severance Payment: A lump-sum payment based on the employee's tenure at the company.
Number of years employed with the company X 2 weeks of regular pay = Severance pay total, for example: If your salary is $100,000 per year, that is roughly $3,846 for two weeks. If you have been at the company for 10 years, your severance pay would be $38,460 ($3,846 X 10 years). Assuming there is no cap mentioned in the severance package offer.
Continued salary or pay period: Payment of a percentage of the employee's salary for a certain period. This helps certain visa holders like H1B to prepare for finding a new job as the USCIS grace period is only 60 days. Read more.
For example, In Jan 2023, Google continued paying for a couple of months. So if the employee was terminated in Jan, he/she was still on payroll until Mar 2023.
Healthcare benefits: Continued healthcare coverage for some time or a lump-sum payment to help cover the cost of COBRA or other health insurance.
Retirement benefits: Payment of a lump-sum amount or continuation of certain retirement benefits.
Stock vesting: Acceleration of vesting or other treatment of stock options or equity awards.
Immigration/outplacement services: Assistance with job search, resume writing, and interview preparation.
Other benefits: Payment for accrued but unused vacation time, a company car or cell phone, or other benefits that the employee may have received as part of their employment.
Negotiating a Severance Package
When you're leaving a job, negotiating a severance package means talking to your employer about money and benefits that can help you during the time you're not working. This can be important to make sure you have enough support between jobs.
Whether you're leaving in a good way or because of unexpected things, learning how to talk about a severance package can help you get good terms and move forward in your career.
Can you negotiate a severance package?
Yes, you can negotiate a severance package. When leaving a job, it's possible to have discussions with your employer about the terms of your departure, including things like compensation, benefits, and support during the transition.
Keep in mind that the outcome of these negotiations depends on various factors, including company policies, your role, and the circumstances of your departure. It's often a good idea to approach these discussions with professionalism and clarity about your needs and expectations.
How to negotiate a severance package?
Negotiating a severance package involves several steps to ensure you're advocating for the best possible terms. Here's a simple guide:
Assess the Situation: Understand the reasons for your departure and your value to the company. Consider your years of service, role, contributions, and any relevant employment agreements.
Do Your Research: Research typical severance packages in your industry, role, and level of experience. This will give you a benchmark to guide your negotiations. Try applications like Blind to find the typical severance package without revealing your identity.
Gather Information: Collect information about your company's severance policies, if any, and review your employment contract for any relevant clauses.
Prepare a Proposal: Create a clear and reasonable proposal that outlines your expectations for severance pay, benefits continuation, job search support, and other terms you believe are fair.
Choose the Right Time: Approach your employer at an appropriate time, such as during a performance review or a one-on-one meeting. Be sensitive to the company's circumstances as well.
Communicate Professionally: Present your proposal professionally and respectfully. Explain your reasons for the request and how it aligns with your contributions and years of service.
Be Flexible: Be open to negotiation and willing to compromise on certain terms if needed. Approach the negotiation with a collaborative mindset.
Document Everything: Keep records of your discussions and any agreements made. This ensures clarity and helps prevent misunderstandings later.
Consider Legal Counsel: If your situation is complex or involves legal aspects, consider seeking advice from an employment attorney to ensure your rights are protected.
Focus on a Win-Win: Approach the negotiation with the goal of achieving a mutually beneficial outcome. Leaving on positive terms can be beneficial for both you and the company.
Remember, each situation is unique, and the success of your negotiations will depend on various factors. Approach the process professionally and with a clear understanding of your value and needs.
How to negotiate severance when laid off?
My buddy recently faced a layoff, and I was really impressed by how he handled it. After the initial shock, he dove into understanding the company's severance policies and his own contributions over the years.
He scheduled a chat with HR and crafted a well-thought-out proposal, covering everything from severance pay to benefits continuation. He stayed calm, emphasized his dedication, and kept things professional during the conversation.
The best part? He managed to negotiate terms that provided him with a safety net while he looks for his next opportunity. It's really a testament to how he approached the situation head-on and with a positive attitude.
How to ask for severance pay when resigning?
A few years back, one of my friends resigned from his job, and I was really impressed by how he handled it. He scheduled a meeting with his supervisor and explained his decision professionally and respectfully. He emphasized the positive contributions he had made during his time at the company and expressed his desire for a smooth transition.
In a thoughtful manner, he proposed the idea of a severance package to help him during his job search period. His supervisor appreciated his dedication and contributions, and after a constructive discussion, they agreed on a reasonable severance package that would provide financial support.
It's clear that his professionalism and proactive approach played a significant role in securing a beneficial outcome during this transitional phase.
How to ask for more severance?
This is a copy of the email which I used during my own resignation several years back. This would definitely give some idea of how to request severance.
"During my time at the company, I've consistently gone above and beyond my responsibilities to ensure the success of projects and contribute positively to the team. My dedication is reflected in the [specific accomplishments or initiatives] that I've led and the positive feedback I've received from colleagues and clients.
Considering my track record and the value I've added, I believe that a more substantial severance package would provide me with the financial support I need during this transitional period. It would also be a fair recognition of my commitment and the contributions I've made to the company's growth. I'm confident that a mutually beneficial arrangement can be reached, taking into account my dedication and the positive impact I've had on the organization."
Severance Package Negotiation Example Letter
Dear [HR's Name],
I hope you're well. I'm writing to discuss the terms of my departure from [company name] and to explore the possibility of negotiating a fair severance package. With my role ending due to [reason for layoff], I believe a well-considered arrangement can benefit both parties.
Considering my [number of years] of service and the positive impact I've had, I'd like to discuss including the following points in the package:
A severance payment reflecting my contributions
An extension of benefits coverage for a smooth transition
Support for my job search efforts, such as career counseling or networking opportunities
I understand company policies and current circumstances play a role. However, a balanced package would reflect the company's commitment to employees' well-being and continued success. I'm open to discussing these matters further to reach a fair resolution that benefits both sides.
Thank you for considering my request. I look forward to hearing from you to discuss the next steps.
Sincerely,
[Your Name]
Conclusion
Hopefully, people find this article helpful in understanding what constitutes a severance package and what can they expect. If you know someone who was impacted due to current market conditions, please feel free to write in the comments section below and that might help others to negotiate or even construct a better severance agreement with their new employer.
Next: H1B grace period with severance pay
Related Posts
✔ How to apply for B1/B2 visa for parents
