Do Kentucky employees have a right to severance pay?

On Behalf of | Jun 3, 2024 | Severance |

The loss of a job can be a major personal setback. Many people derive much of their personal identity from their careers, so suddenly becoming unemployed is a jarring experience. Beyond that, many people do not have enough money set aside in their savings accounts to fully cover their living expenses for more than a few weeks.

The more a worker earns, the more their typical expenses may be in the more debt they may carry. Well-paid workers, in particular, may hope to receive severance pay or comprehensive severance packages that include certain benefits from their employers at the time of their termination.

Does the law in Kentucky require that employers provide severance pay when ending a worker’s job with an organization?

Workers negotiate severance on an individual basis

Contrary to what some people expect, neither federal law nor Kentucky employment statutes mandate severance pay for and involuntary termination of employment. That being said, it is typically the contract that a worker arranges with a business that entitles them to severance compensation. Companies have to pay workers in full for their work even after a dismissal according to the agreement the employer has with the worker.

Most workers negotiate for severance pay when they first take jobs at companies. However, negotiating for severance can also occur at the end of an employment arrangement in some cases. Workers can potentially receive a certain number of regular payroll checks or a lump-sum amount of severance pay. They could also theoretically arrange to continue receiving benefits for a portion of their transitional period.

The current rules for severance pay mean that employees do not automatically get to sue a company for failing to provide them with a severance package. However, if an employee has a contract that includes a severance package, they may have grounds for litigation if the company refuses to uphold that agreement.

The best time to clarify severance matters is when beginning a job, as the company is most likely to be cooperative and generous at that time. Workers negotiating a new employment contract or reviewing the circumstances of a recent termination may require the insight and advice of someone familiar with employment statutes.

Being able to identify when a company’s severance package practices violate a worker’s rights or their contracts could help them hold an offending company accountable. Those concerned about the possibility of a sudden job loss may need to push for a severance agreement when they accept a new position with an employer.

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