In most circumstances, severance pay is disqualifying income and you cannot receive UI benefits for the same weeks you are receiving severance pay. If you were required to sign a release of claims by your former employer in order to receive the severance pay, then the payments are not disqualifying and you could be eligible to receive Unemployment Insurance benefits simultaneously.
If you received severance pay in a lump sum, DUA will prorate the severance pay and any disqualification will run for the number of weeks for which you are receiving severance pay.
Example: If your claim was filed on July 1, 2013, your benefit year would begin on June 30, 2013. The benefit year would ordinarily end on June 28, 2014.
In this example, if you received eight weeks of disqualifying severance pay, your benefit year end date would be extended by eight weeks, for a new date of August 23, 2014.
You would have until that date to receive all the available benefit on that claim, if you were not able to find new employment.
In general, the following are disqualifying and would result in an extension of the benefit year:
- payment in lieu of notice
- termination pay
- severance pay
- dismissal pay
If you received severance pay under the official designation of a plant closing, the severance pay would not be disqualifying provided the severance is paid in a lump sum.
If you received severance pay in any denomination other than a lump sum payment, under the official designation of a plant closing, you will be subject to disqualification for the period of time the severance pay is applied.
A plant closing designation may be made when there were more than 50 workers employed at a work location in the prior six-month period, and there was a reduction in force of at least 50 percent.
If you were required to sign what is known as a "release of claims" as a condition of receiving severance pay, the severance pay would not be disqualifying.