Severance pay: what it is, what to check, and how to ask for more.
Severance is money or benefits an employer may offer when your job ends, often in exchange for signing an agreement. Understanding what you are being offered, and what you are giving up, is worth a careful read.
Severance pay is compensation an employer may offer when ending your employment. The U.S. Department of Labor says the FLSA does not require severance; it is a matter of agreement between employer and employee. The IRS says severance pay is taxable income. Before signing, read what you give up (often a release of claims), check deadlines, and ask politely for better terms if you have reasons.
3 copy-ready templates
Illustrative: names, companies, dates and numbers in these templates and examples are fictional. Replace every bracket with your own true details before you send anything.
Ask for time to review
When to use: In the meeting or right after.
"Thank you. I'd like to review the agreement carefully before signing. Could you confirm how long I have to consider it, and send it to me in writing?"
Ask for better terms
When to use: Specific, polite and based on facts you can name.
Subject: Severance agreement, [Your name] Hi [HR contact], Thank you for the severance offer. Given [my years of service / the project I was mid-way through / the bonus that would have paid out on date], I'd like to ask whether the company would consider [an additional amount / extending health coverage support / paying out the bonus / a neutral reference]. I'm keen to sign once we've discussed it. Best regards, [Your name]
Ask about non-cash terms
When to use: When the cash amount is fixed.
Would the company consider [outplacement support / keeping my laptop / a neutral reference letter / an agreed description of my departure] as part of the agreement?
Disclosure: TryHired makes HIRED, a paid job-search program, so we have a conflict of interest when we mention it. Every template on this page is free to use without buying anything.
What to check in a severance agreement
| Situation | What to do |
|---|---|
| Amount and payment schedule | Lump sum or instalments? |
| Release of claims | What legal claims you give up by signing. |
| Deadline to sign | And any period to change your mind, if the agreement includes one. |
| Benefits | When health coverage ends; any help with continuation. |
| Other clauses | Non-compete, non-disparagement, confidentiality, reference wording. |
The same message, rewritten
Illustrative example with fictional details.
| Version | Example |
|---|---|
| Weak | Signing the agreement in the meeting without reading it, because you were told 'this is standard'. |
| Strong | Asking how long you have to review it, reading the release, and sending one polite email asking for one specific improvement with a reason. |
Why it matters: Severance agreements often ask you to give something up, typically legal claims, in exchange for payment. Taking the time to read and ask is reasonable and expected.
Mistakes to avoid
- Signing on the spot.
- Assuming the offer can't be discussed.
- Making threats instead of requests.
- Ignoring non-compete or non-disparagement clauses.
- Not getting legal advice when the release or amounts are significant.
What federal sources say
Quoted from official pages; rules can differ by state and by your contract.
- U.S. Department of Labor, Severance Pay: "There is no requirement in the Fair Labor Standards Act (FLSA) for severance pay." and "Severance pay is a matter of agreement between an employer and an employee (or the employee's representative)." Accessed Nov 2, 2026.
- Internal Revenue Service, Publication 525, Taxable and Nontaxable Income: "You must include in income amounts you receive as severance pay". Accessed Nov 2, 2026.
- U.S. Department of Labor, Continuation of Health Coverage (COBRA): COBRA "gives workers and their families who lose their health benefits the right to choose to continue group health benefits" and generally applies to group health plans of employers with 20 or more employees in the prior year. Accessed Nov 2, 2026.
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Questions people ask
Is severance pay required by law?
Is severance pay taxable?
Can you negotiate severance?
Should I talk to a lawyer about a severance agreement?
Does taking severance affect unemployment benefits?
How this page is built
Written by Maid Dizdarevic, a career coach and 8x LinkedIn Top Voice. The templates and timing guides are practical advice, labelled as advice. We do not publish response rates or success rates, and every example uses fictional details. Federal facts are quoted from the official pages listed under Sources.
- How a specific employer or recruiter will respond: practices vary by company, industry and person.
- Legal advice: for contracts, severance releases or disputes, talk to an employment attorney or the relevant agency.
- Outcomes: no message, template or program can promise an interview or a job.
- TryHired editorial guidance by Maid Dizdarevic, career coach, Nov 2, 2026.
- U.S. Department of Labor, Severance Pay: "There is no requirement in the Fair Labor Standards Act (FLSA) for severance pay." and "Severance pay is a matter of agreement between an employer and an employee (or the employee's representative)." Accessed Nov 2, 2026.
- Internal Revenue Service, Publication 525, Taxable and Nontaxable Income: "You must include in income amounts you receive as severance pay". Accessed Nov 2, 2026.
- U.S. Department of Labor, Continuation of Health Coverage (COBRA): COBRA "gives workers and their families who lose their health benefits the right to choose to continue group health benefits" and generally applies to group health plans of employers with 20 or more employees in the prior year. Accessed Nov 2, 2026.