How does severance pay affect unemployment benefits?

My husband is losing his job after 25 years. They are offering him a year of severance pay that will be paid out in a lump sum on January 3rd, 2014. Will he be able to file on January 4th and start collecting soon after? That is what I was told when I called the unemployment office but other people are saying that may not be true. I have tried to call back to get more information and can't get through. Appreciate any insight you may have. Thank you!

1 answer  |  asked Dec 9, 2013 5:58 PM [EST]  |  applies to Ohio

Answers (1)

Christina Royer
Based on what you write above, I believe your husband's severance payment will preclude him from receiving unemployment compensation.

This is because severance payments are deducted, dollar for dollar, from unemployment payments. Even though the payment will be made in one lump sum, the Ohio Department of Job & Family Services looks at the number of weeks of pay the payment represents (in your husband's case, 52 weeks) for purposes of offsetting.

That means he would not be able to collect unemployment until the period of time represented by the severance (1 year) runs out.

To avoid this result, certain language can be included in the severance agreement, allocating the severance payment to your husband's last day worked.

I hope that helps,

posted by Christina Royer  |  Dec 10, 2013 05:46 AM [EST]

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