Should I accept a severance package or claim unemployment?

On Behalf of | Dec 14, 2022 | employment law | 0 comments

If you are facing the prospect of losing your job, questions and concerns over your financial condition become a priority. In Texas, laws are in place to control severance agreements.

There are different types of severance agreements, some of which impact the employee’s eligibility for benefits. The Texas Payday Law also makes it clear that employers do not have a requirement to provide severance pay unless a prior promise of severance exists.

Terms of severance agreements

Although severance payments are typically the final compensation during worker separation, the terms are not always favorable to the employer. Texas law determines the parameters for issuing the payment, such as limitations on deductions and timelines for payment. A written policy determines the requirement for paying severance. Severance terms usually take into account years of employment and job performance with the company.

Unemployment compensation

If you disagree with the terms of compensation under a severance package, there is the option to negotiate with the employer. The employer must report any severance payments or wages in lieu of notice to the Texas Workforce Commission. An individual does not have an automatic disqualification for unemployment benefits when receiving severance, but payments could experience a delay until wages through the severance contract stop. The TWC has the final say in approving any benefit requests, and it considers the individual situation in the decision.

Accepting a severance package will give you some financial support if you lose your job. You have the option to file for additional assistance through unemployment benefits.