What Is a Fair Severance Package? A Plain-English Guide (2026)

The Short Answer

A fair severance package typically includes one to two weeks of base pay for every year you worked, continuation of health insurance through the end of the month (or longer), and the vesting of any earned but unpaid bonuses. But "fair" varies enormously depending on your level, industry, years of service, and whether you choose to negotiate.

Most employers offer the bare minimum first. Understanding what fair looks like — and what levers you can pull — is how you close the gap.

What a Standard Severance Package Includes

A typical severance offer at a mid-sized US company includes:

• Severance pay: Usually one week of base salary per year of service. Senior employees often receive two weeks per year.
• Benefits continuation: Health insurance coverage for 30 to 90 days, sometimes via COBRA subsidy.
• Outplacement services: Career coaching or job search support, more common at larger companies.
• Accelerated vesting: Some companies vest unvested stock options or RSUs upon layoff, especially at tech firms.
• Reference letter: A written reference or agreement on what will be communicated to future employers.

What is almost always absent from the initial offer: payment of unused PTO (depending on your state), bonus proration for the current year, and extended benefits. These are the areas with the most negotiating room.

The 1-Week-Per-Year Rule: Where It Comes From

There is no federal law in the United States that requires employers to pay severance at all. The one-week-per-year figure is simply an industry convention that became widespread because it is easy to calculate and defensible in negotiations. It is a starting point, not a ceiling.

For context: employment lawyers often describe a reasonable severance as closer to two weeks per year for employees with more than five years of tenure, and significantly more for executive-level positions where finding comparable work takes longer.

The higher your salary, the longer it typically takes to find an equivalent role — and severance is partly meant to compensate for that reality.

How Severance Differs by Level

Job level has an outsized effect on what you can expect and negotiate:

• Entry-level / under 2 years: Often 2–4 weeks total, regardless of formula. Benefits through end of month.
• Mid-level / 3–7 years: 1–2 weeks per year. More room to negotiate on bonus proration and benefits.
• Senior / 8+ years: 2 weeks per year is reasonable. Non-compete clauses often appear here — read them carefully.
• Director / VP+: 3–6 months is common. Executive agreements often specify severance terms in advance.

What You Can Negotiate

Many employees don't realise the initial offer is a starting position, not a final one. Areas where employers commonly have room to move:

• Pay amount: Especially if you have a strong tenure or the layoff violates any implied promises.
• Benefits duration: Ask for COBRA subsidy or extended coverage to 90 days.
• Bonus proration: If you're being laid off mid-year and were tracking toward a bonus, ask for a prorated payment.
• Non-compete scope: Narrow the geography, industry, and duration.
• Neutral reference: Agree on exact language for what HR will say when called.
• Equity: Ask for accelerated vesting or an extended exercise window on options.

Red Flags in a Severance Agreement

Not everything in a severance agreement is in your favour. Watch for:

• Overly broad non-compete clauses that could prevent you from working in your field
• Non-disparagement clauses that are one-sided (they apply to you but not the company)
• Clawback provisions if you're hired by a competitor
• Signing deadlines shorter than 21 days (for employees over 40, the ADEA gives you at least 21 days to consider)
• Waiver of claims you don't yet know about

The Bottom Line

A fair severance is one that reflects your actual market value, your tenure, and the circumstances of your departure. The employer's first offer rarely meets that bar. Go in informed, negotiate politely but confidently, and don't sign anything under pressure — especially if you're over 40, in which case you have a legal right to at least 21 days to review.