Severance pay, wage continuation pay, or other similar payment made by an employer as continuing wages or other monetary consideration as the result of a worker’s separation from employment, is compensation which must be used to determine the worker’s unemployment benefits. Sections 48 and 27(c) of the Michigan Employment Security Act says that the severance payment will reduce the unemployment benefits otherwise payable only in the weeks to which the severance payment is made (or allocated).
The amount of unemployment benefits will be reduced by the severance payment in one of the following ways:
- If the severance payment attributed to a week equals or exceeds 1½ times the claimant’s weekly benefit amount, then the claimant is entitled to no unemployment benefits for the week.
- If the claimant’s earnings are less than 1½ times the claimant’s weekly benefit amount but greater than the claimant’s weekly benefit amount, then the full amount of the severance payment is subtracted from 1½ times the claimant’s weekly benefit amount.
- If the severance payment is equal to, or less than, the claimant’s weekly benefit amount, then half the severance payment is subtracted from the claimant’s weekly benefit amount.
Additionally, if the employer makes a lump sum severance payment to a worker and allocates that severance payment to a week or weeks other than the week in which the payment is actually made, then the worker’s employment benefits otherwise payable for that week will be reduced by the severance payment allocated to that week.
Please see the fact sheet from the Michigan Unemployment insurance Agency for more information at: http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CDEQFjAA&url=http%3A%2F%2Fwww.michigan.gov%2Fdocuments%2Fuia%2F125_–_Severance_pay_04_29_09_277316_7.pdf&ei=U8i0UPS8KcqqywH56YFg&usg=AFQjCNEhU1rkD069pOKqRWzrvRuJ02Hy3w
This blog post was written by Roger Leshinsky, Law Clerk for Demorest Law Firm, PLLC.
