Is my severance offer typical? How employers set severance, and a calculator

Is my severance offer fair?

Compare it with the formula your employer used, then with what employers typically do. Most pay by formula: a number of weeks per year of service, with a minimum and often a cap, set by level. In LHH's 2027 benchmark study (published October 2026) of 600 US leaders, 92% of organizations pay severance; 52% set a minimum of 4 to 6 weeks and 29% set a cap of 7.5 to 24.2 weeks, higher for senior roles. No federal law requires severance, so "fair" means consistent with the formula, with peers at your level, and with what you're giving up by signing.

Check your offer against a formula

Ask HR which formula applied to you. Then enter it, or try common ones, below. The example is a $120,000 salary and 8 years of service at 2 weeks per year, with a 4-week minimum and a 26-week cap: 16 weeks, or $36,923 before tax.

Severance by formula

Annual base salary

$

Years of service

Weeks per year of service

Minimum weeks

Maximum weeks

0 = no capPartial yearsCompleted years onlyCredit partial years

Weekly pay (salary ÷ 52)

$2,308

Weeks of severance

16

Severance before tax

$36,923

Educational estimate, not legal advice. Nothing you enter leaves this page.

Years of service	Weeks	Severance before tax
1	4	$9,231
3	6	$13,846
8	16	$36,923
15	26	$60,000
25	26	$60,000

Exhibit 1. Source: FST calculation: salary ÷ 52 × weeks. Example formula only, not a benchmark.

How employers build the formula

Exhibit 2. Source: LHH, 2027 Severance and Separation Benefits Benchmark Study (600 US leaders), published October 2026

Most employers now weigh more than years of service. That cuts both ways: it gives more room for judgment, and more room to ask. If your offer seems low, ask what factors were used and how they applied to you.

What else counts besides the weeks

• Health coverage. In the LHH study only 12% of organizations continue medical coverage for the whole severance period, down from 52% in 2024. Paid COBRA months are worth asking for. See COBRA or Marketplace.
• Bonus, commission and equity earned or vesting soon.
• Unused vacation, which some states require to be paid anyway, so it isn't really part of the offer.
• Outplacement and how long it lasts.
• What you give up: the release, any non-compete, and the timing of payments.

The New Jersey exception

New Jersey requires severance in covered mass layoffs: one week of pay per full year of service, plus four more weeks if the employer gave less than 90 days' notice. If you work in New Jersey and were part of a layoff of 50 or more, check whether this applies to you.

Before you sign

If you're 40 or older, you have at least 21 days to decide, or 45 in a group layoff; see how long you have to sign. Use the time to ask for changes. Severance is usually withheld at the 22% federal supplemental rate (37% above $1 million), which may not match your actual tax; see taxes on severance.

Sources

1. LHH, 2027 Severance and Separation Benefits Benchmark Study: how much severance should companies pay, accessed Oct 30, 2026.
2. New Jersey Department of Labor and Workforce Development, New Jersey WARN Act as amended, P.L. 2023, accessed Oct 30, 2026.
3. Internal Revenue Service, Publication 15 (2026), Employer's Tax Guide: supplemental wages, accessed Oct 30, 2026.