Can an employer change a severance package?
Asked by: Alexandrine Lindgren | Last update: December 18, 2025Score: 4.4/5 (44 votes)
Unfortunately, yes, employers have the right to change a severance amount or revoke your severance agreement altogether. However, this is not the case if you have a contractual agreement with your employer.
Can a company change your severance package?
Such an employer, under no obligation to bargain with its workers about employment terms, may simply choose to take a unilateral action to alter or eliminate a severance pay plan or practice.
What is the law for severance agreements in New Jersey?
Under the amended law in 2023, employers are required to pay all terminated employees severance of one week of pay for each year of employment even if they provide the full requirement of 90 days' notice. If an employer fails to give a full 90 days' notice, they must pay an additional four weeks of pay to the employee.
Can severance agreements be overturned?
If you are under the age of 40 or if you are over 40 but it has been more than 7 days, the agreement can be invalidated if your employer committed fraud or deception, or made a misrepresentation to you in order to get you to sign the agreement. The agreement may also be unenforceable if you signed it under duress.
Can an employer take back a severance offer?
Revoking Severance: Generally, once a severance agreement is signed by both parties, an employer cannot unilaterally revoke it without a valid legal reason. Severance agreements are contractual obligations, and both parties are bound by the terms.
What can I do if my company refuses to pay severance pay?
Can a company cancel your severance package?
Yes, your employer can change or even cancel your severance amount if you do not have a contract detailing how your severance package is calculated. If you do not have an agreement, you employer has full discretion to determine how much to offer, to change the offer, or to simply not offer a severance package.
What voids a severance agreement?
Fraud, misrepresentation, duress, or unconscionability are common defenses you can use if you want to void a severance agreement that you already signed.
Can a company renege on a severance package?
You're already laid off or set to retire, and they can't lower or cancel a pending severance package without causing significant issues. In our experience, companies rarely revoke severance offers.
What is the rule of 70 for severance?
5) What is the Rule of 70 for severance? In the United States, the "Rule of 70" for severance is a simple way to determine if an employee is eligible for retirement-related. If the sum of the employee's years of service and age is 70 or more, you can combine retirement benefits as severance pay.
Can I lose my severance pay?
Let's take a look at a few scenarios where severance pay might stop: Ongoing severance pay could be conditioned upon you remaining an employee of the company – so if you start a new job, that start date at the new job becomes the end date at the old job. That also means severance pay would stop from that day forward.
Can you fight a severance package?
Yes. While there isn't a requirement for employers to offer severance pay under the Fair Labor Standards Act (FLSA), you can still try to negotiate. When offered a severance package, you're not required to sign the agreement immediately.
How long do I have to review a severance agreement in New Jersey?
What You Need to Know About Severance Agreements. If you have reached age 40, by law, your former employer must give you 21 days to review a severance agreement. Once you decide to sign, you have another seven days to change your mind. There's no need to act hastily.
Can you collect unemployment if you get a severance package in NJ?
However, that is largely not the case in New Jersey. You can get unemployment benefits even if you are also getting a severance package. The state does not treat your severance pay as income for the purposes of unemployment—at least in most cases.
How much is a typical severance package?
The severance pay offered is typically one to two weeks for every year worked, but it can be more. If the job loss will create an economic hardship, discuss this with your former employer. The general practice is to try to get four weeks of severance pay for each year worked.
Can you refuse a severance package?
What are common reasons to reject a severance offer in California? Inadequate compensation, restrictive clauses, waiver of valuable legal claims, or discriminatory terms are valid reasons to reject a severance offer.
Can a company hire you back after severance?
Some employers might make you repay all or part of any money you received if you're rehired within a certain amount of time. Read the severance plan carefully for the details. At the very least, if your former employer offers to rehire you, ask whether you'll have to pay back your severance benefits.
What is prohibited in severance?
Separation agreements cannot include language barring you from pursuing legal action for past or potential injuries, including any bodily harm resulting from accidents, occupational hazards, or unsafe working conditions.
Does severance pay stop when you get a new job?
While severance payments typically won't stop after finding another job, employees must also consider the relationship between severance payments, unemployment benefits, and new employment.
What is maximum severance?
Total severance pay is limited to 52 weeks of pay. If an employee is reemployed before exhausting the 52 weeks, and becomes eligible for severance pay again, the severance fund will be recomputed based on creditable service and current age and paid out for the period of the 52 weeks remaining to the employee.
What are the red flags in a severance agreement?
Severance agreements can provide crucial financial support for departing workers, but employers often have ulterior motives when offering them. Pressure to sign, inadequate pay or benefits, protections favoring the employer at your expense, and overly restrictive provisions are red flags in a severance agreement.
Can a company withdraw a severance agreement?
While it is unusual for an employer to withdraw a severance offer, it is important to understand that the offer may be rescinded, even if it is covered by the OWBPA. Employers need to be cognizant of their rights in the event of bad behavior by the employee before the agreement is signed.
What is the downside to severance?
What is the downside to severance? The downside to severance includes financial drawbacks such as loss of steady income, potential loss of benefits, and uncertainty about future job prospects, as well as the impact on retirement savings and benefits.
Can you contest a severance package?
Remember, once you sign a severance agreement, you forfeit all your legal rights against your employer. In California, these agreements are binding, which means there's no going back once you've signed. Protect yourself and fully understand the implications of what you're signing.
Can you sue an employer after signing a severance agreement?
Yes, you can sue if the severance package did not include a release. However, if you signed a release, suing becomes more difficult. A release of claims clause prevents former employees from suing their employer for any employment-related issues that may have contributed to the termination.
Can a severance package be rescinded?
Okay, unfortunately without any type of contractual obligation a severance package is entirely voluntary on the part of the employer and they can rescind that offer at any time up until the employee accepts it.