How do I calculate my weekly pay for severance?

For salaried workers, divide your annual salary by 52. For hourly workers, multiply your hourly rate by your average weekly hours. This gives you the base weekly pay used in severance calculations.

What is a typical severance formula?

The most common formula is 1-2 weeks of pay per year of service. For example, with 5 years of service and a 2 weeks/year formula, you'd receive 10 weeks of pay. Executives often receive more generous formulas.

How do severance caps work?

Many employers cap severance at a maximum number of weeks (often 26 or 52 weeks) regardless of tenure. If your calculated severance exceeds the cap, you'll receive the capped amount instead.

Should I include PTO payout in my severance estimate?

PTO payout is usually separate from severance and may be legally required regardless. Our calculator lets you add it to see your total payout, but track them separately in negotiations.

How do I estimate severance if I don't know the formula?

Start with 1-2 weeks per year of service as a baseline. Check your employment contract, employee handbook, or HR for your company's policy. You can also ask HR directly about the severance formula.

Is my severance estimate before or after taxes?

Severance estimates are typically gross (before taxes). Severance is taxable income in most countries, so your net payout will be lower. Consider consulting a tax professional for accurate after-tax amounts.

How to Estimate Your Severance Pay (Step-by-Step) | Complete Guide

Step 1: Determine Your Weekly Pay

The first step in estimating severance is calculating your weekly pay, which forms the basis of most severance formulas.

For Salaried Employees

Weekly Pay = Annual Salary ÷ 52

Example: $78,000 annual salary ÷ 52 = $1,500/week

Use your gross (before-tax) annual salary. If you're unsure, check your offer letter or most recent pay stub and multiply by pay periods per year.

For Hourly Employees

Weekly Pay = Hourly Rate × Average Weekly Hours

Example: $22/hour × 40 hours = $880/week

Use your base hourly rate and typical weekly hours. Don't include overtime premiums unless your company specifically factors them into severance calculations.

Step 2: Identify Your Severance Formula

The formula used to calculate severance varies by employer. Here's how to find yours:

Where to Find Your Company's Formula

Employment contract: Check the termination or severance section
Employee handbook: Look for severance or separation policies
HR department: Ask directly about the company's severance policy
Severance agreement: If you've received one, it will specify the terms

Common Severance Formulas

Formula Type	Description	Common For
1 week/year	One week of pay per year of service	Standard/minimum tier
2 weeks/year	Two weeks of pay per year of service	Professional positions
3-4 weeks/year	Three to four weeks per year	Executives, senior roles
Fixed weeks	Same amount regardless of tenure	Some tech companies

Step 3: Calculate Base Severance

Once you have your weekly pay and formula, calculate the base severance:

Severance = Years of Service × Weeks per Year × Weekly Pay

Or for fixed formulas: Severance = Fixed Weeks × Weekly Pay

Example Calculation

Salaried Employee - Standard Formula

Annual salary: $75,000
Weekly pay: $75,000 ÷ 52 = $1,442
Years of service: 6 years
Formula: 2 weeks per year of service
Calculation: 6 × 2 × $1,442 = $17,304

Step 4: Apply Caps and Minimums

Many employers have caps or minimums that affect the final severance amount:

Maximum Caps

Caps limit total severance regardless of tenure. Common caps include:

26 weeks: Six months of pay maximum
52 weeks: One year of pay maximum
Dollar amount: Some employers cap at specific amounts (e.g., $100,000)

Cap Example

Years of service: 15 years
Formula: 2 weeks per year → 30 weeks
Cap: 26 weeks maximum
Result: Capped at 26 weeks of pay

Minimum Guarantees

Some employers guarantee a minimum severance regardless of tenure. For example, everyone gets at least 4 weeks even if their calculated amount is less.

Step 5: Add Optional Components

Your total separation payout may include additional amounts beyond base severance:

Unused PTO Payout

If you have accrued vacation or PTO, this may be paid out separately:

Calculate accrued, unused hours
Multiply by hourly rate (or calculate daily rate from salary)
Note: Some states legally require PTO payout regardless of severance

Bonus or Commission

You may be entitled to pro-rated bonuses or earned commissions:

Pro-rated annual bonus based on time worked
Sales commissions earned but not yet paid
Signing bonus clawback (you may need to repay)

Real-World Examples

Example 1: Entry-Level Office Worker

Annual salary: $52,000 ($1,000/week)
Years of service: 3 years
Company formula: 1 week per year of service
Calculation: 3 × 1 × $1,000 = $3,000
Plus unused PTO: 40 hours × $25/hr = $1,000
Total payout: $4,000

Example 2: Mid-Career Manager

Annual salary: $95,000 ($1,827/week)
Years of service: 8 years
Company formula: 2 weeks per year of service
Calculation: 8 × 2 × $1,827 = $29,232
Plus unused PTO: 80 hours × $45.67/hr = $3,654
Total payout: $32,886

Example 3: Long-Tenured Employee with Cap

Annual salary: $72,000 ($1,385/week)
Years of service: 18 years
Company formula: 2 weeks per year, capped at 26 weeks
Calculated: 18 × 2 = 36 weeks → Capped at 26 weeks
Severance: 26 × $1,385 = $36,010

Example 4: Hourly Worker

Hourly rate: $18/hour, 38 hours/week
Weekly pay: $18 × 38 = $684/week
Years of service: 5 years
Company formula: 1.5 weeks per year of service
Calculation: 5 × 1.5 × $684 = $5,130

Using the Severance Pay Calculator

Our free calculator automates these calculations. Here's how to use it:

Select employment type: Choose salaried or hourly
Enter your pay: Annual salary or hourly rate + weekly hours
Enter years of service: Your total tenure at the company
Choose formula type: Weeks per year or fixed weeks
Set formula details: Weeks per year, minimum, and maximum cap
Add extras: Toggle on PTO payout or bonus if applicable

Calculate Your Severance Now

Use our free calculator to estimate your potential severance package instantly.

Open Severance Calculator

Important Reminders

This is an estimate: Actual severance depends on your specific contract, company policy, and negotiation.
Taxes apply: The amounts shown are gross (before taxes). Your net payout will be lower after tax withholding.
Negotiate if possible: Severance offers are often starting points, especially for senior positions.
Review carefully: Before signing a severance agreement, understand all terms including non-compete clauses and release of claims.
Consider professional advice: For significant severance or complex situations, consult an employment attorney.