calculator template · Free download
Severance Pay Calculator
Free severance pay calculator: weeks per year of service with min and max, COBRA subsidy and PTO payout, plus UK statutory redundancy pay at the 2026 cap.
Updated
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Calculate severance pay
Estimate a severance package from your policy formula: weeks of pay per year of service, a minimum and maximum, plus a COBRA subsidy and unused PTO. Switch to UK for statutory redundancy pay. Figures are gross, before tax.
Rules
Pay type
Partial years
- Weekly pay
- $1,500.00
- Service counted
- 6.00 years
- Weeks by formula
- 12.00 wks
- Weeks paid
- 12.00 wks
- Severance pay
- $18,000.00
- COBRA premium subsidy
- $1,950.00
- PTO payout (at $37.50/hr)
- $1,500.00
- Total package
- $21,450.00
Severance is taxable wages in the US. Unused PTO that state law or your policy already requires you to pay is owed whether or not the employee signs a release.
How the math works, with sources
US: severance weeks = weeks per year x years of service, then raised to the minimum or cut to the maximum. Severance pay = weeks x weekly pay. Weekly pay is salary / 52, or hourly rate x standard weekly hours. COBRA subsidy = employer monthly premium share x months. PTO payout = unused hours x hourly rate (salary / 2,080).
The US Department of Labor states there is no severance requirement in the FLSA; severance is a matter of agreement between employer and employee. Most employers use 1 to 2 weeks per year of service with a floor and a ceiling, and write the formula into a policy so every case is calculated the same way.
UK: counting back from the relevant date, each full year earns half a week's pay under age 22, one week from 22 to 40, and one and a half weeks from 41, for at most 20 years. Acas's example: age 45, 22 years' service, £300 a week gives 4 x 1.5 + 16 x 1 = 22 weeks, £6,600.
A release signed by a US employee aged 40 or older must meet the Older Workers Benefit Protection Act timing rules (21 days to consider for an individual exit, 45 for a group, then 7 days to revoke). This calculator is not legal or tax advice; check state final-pay rules and get counsel to review the agreement.
Sources: DOL: severance pay, GOV.UK: redundancy pay, Acas: work out redundancy pay, 29 U.S.C. 626(f) (OWBPA).
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What you get
- Weeks-per-year, minimum/maximum, and level-tiered severance formulas
- Weekly pay derivation for salaried and hourly employees
- Four fully worked US examples including COBRA subsidy and PTO payout
- Jurisdiction notes: WARN, OWBPA review periods, UK statutory redundancy pay, and India retrenchment compensation and gratuity
- A blank severance worksheet for your own cases
Template preview
A preview of the structure. Download the PDF or CSV for the complete, ready-to-use version.
Inputs
- Annual base salary or hourly rate
- Standard weekly hours— for hourly employees, e.g. 40
- Hire date and separation date— to calculate completed years and months of service
- Job level— if your formula varies by level
Severance formulas
| Component | Formula | Example | Result |
|---|---|---|---|
| Weekly pay (salaried) | Annual salary / 52 | $78,000 / 52 | $1,500 |
| Weekly pay (hourly) | Hourly rate x standard weekly hours | $22 x 40 | $880 |
| Severance weeks | Weeks per year x years of service, then apply min and max | 2 weeks x 6 years | 12 weeks |
| Severance pay | Severance weeks x weekly pay | 12 x $1,500 | $18,000 |
Common severance formulas
| Approach | Weeks per year of service | Minimum | Maximum |
|---|---|---|---|
| Standard, all employees | 1 to 2 weeks | 2 to 4 weeks | 12 to 26 weeks |
| Tiered: individual contributor | 1 week | 2 weeks | 12 weeks |
| Tiered: manager | 2 weeks | 4 weeks | 20 weeks |
| Tiered: director and above | 3 weeks | 8 weeks | 26 to 52 weeks |
Worked examples (policy: 2 weeks per year, 4-week minimum, 26-week maximum)
| Employee | Pay and service | Severance calculation | Extras | Total |
|---|---|---|---|---|
| A | $78,000; 6 years | 12 weeks x $1,500 = $18,000 | COBRA $650 x 3 = $1,950; PTO 40 hrs x $37.50 = $1,500 | $21,450 |
| B (hourly) | $22/hr, 40 hrs; 1.5 years | 3 weeks by formula, raised to 4-week minimum: 4 x $880 = $3,520 | None | $3,520 |
| C | $156,000; 15 years | 30 weeks by formula, capped at 26: 26 x $3,000 = $78,000 | Not calculated | $78,000 |
| D | $104,000; 3 years 6 months | 3.5 years x 2 = 7 weeks x $2,000 = $14,000 | Not calculated | $14,000 |
Service rounding changes the answer. Employee D gets 7 weeks if partial years are prorated by month, but only 6 weeks if the policy counts completed years. Pick one method and put it in the policy.
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How to use this template
- 1
Pick a formula
Choose weeks of pay per year of service, set a minimum and maximum, and decide whether the multiplier varies by job level. Write it into a severance policy so every case is calculated the same way.
- 2
Derive weekly pay
Divide annual salary by 52, or multiply the hourly rate by standard weekly hours. Decide in the policy whether bonuses or commissions are included.
- 3
Add benefits and PTO
Add the employer share of COBRA premiums for the subsidy months and any accrued PTO that must or will be paid out.
- 4
Check local rules
Apply WARN notice rules for mass layoffs, OWBPA timing for employees 40 and older, and statutory minimums outside the US before presenting the agreement.
Frequently asked questions
How is severance pay calculated?
Most employers multiply weekly pay by a number of weeks per year of service, commonly 1 or 2, then apply a minimum and maximum. An employee earning $78,000 ($1,500 a week) with 6 years of service at 2 weeks per year gets 12 weeks, or $18,000.
Is severance pay required by law in the US?
No federal law requires it. Severance is owed only if a policy, contract, or plan promises it. The WARN Act is a separate notice requirement for mass layoffs and plant closings, and an employer that fails to give 60 days' notice can owe pay and benefits for the missing notice period.
How many weeks of severance is standard?
One to two weeks per year of service is the most common US formula, usually with a floor of 2 to 4 weeks and a ceiling of 12 to 26 weeks. Senior leaders often have higher multipliers or fixed amounts set in their employment agreements.
How long does an employee over 40 have to sign a severance agreement?
Under the OWBPA, at least 21 days for an individual termination and 45 days for a group layoff or exit incentive program, plus 7 days to revoke after signing. Without those periods, the release of age discrimination claims is not valid.
Is unused PTO included in severance?
PTO payout is usually separate from severance and may be legally required on its own. States such as California, Colorado, Illinois, and Massachusetts require accrued vacation to be paid at separation; elsewhere the written policy controls. Do not make owed PTO conditional on signing a release.
How is statutory redundancy pay calculated in the UK?
It uses age-weighted weeks: half a week per year under 22, one week per year from 22 to 40, and one and a half weeks per year from 41, for up to 20 years of service. Weekly pay is capped at a figure that changes each April: GBP 751 for redundancies on or after 6 April 2026, so the most anyone can receive is GBP 22,530.