Q: If someone receives a severance package from their employer, are they still eligible for unemployment?
A: Whether or not you receive unemployment benefits may be effected if you receive a severance package. Often you may still be eligible for benefits, but it may lower the amount of these benefits for a period of time. If severance or other additional compensation is paid out post employment, you will need to report this to the Unemployment Office so they may determine if it will effect your unemployment payment and for how long.
The Arizona Department of Economic Security reports:
Under certain conditions, severance, vacation, holiday or sick pay may be allocated to a period of time in which Unemployment Insurance benefits are claimed. You are not eligible to receive UI benefits for any week in which allocated severance, vacation, holiday or sick pay exceeds your weekly benefit amount. If the payments are less than your weekly benefit amount, they will be deducted as earnings. You must report severance, vacation, holiday or sick pay when you file your initial claim. If you receive any such payments after your file your initial claim, you should immediately contact the AZ Unemployment Insurance Call Center.
Because situations vary based on individual circumstances, we always recommend that you consult the Arizona Department of Economic Security if you have questions about your unemployment.