Severance

Stop working and income stops the same day. Finding the next position usually takes months rather than weeks. Someone leaving by their own choice can plan around that gap. Someone leaving because the company decided it has no time to plan at all, and three months without income is more than most people have set aside.

That difference shows up like this. Notice on a Thursday afternoon, last day Friday, and the person is calculating next month's rent before they've had time to open their résumé. Even where the company did nothing wrong, the result is one household's income ending without warning.

The people who stay watch how it was handled. The question circulating the office on the Monday after notices go out is not why the company got into trouble. It's what the people who left were given. When that answer is vague, everyone still there imagines their own terms as equally vague.

Severance is where both problems get handled with money. On one side sits an amount fixed by law against length of service, which the company has no say over. On the other sits additional pay when the company ends the job, where the company sets the standard. The first is an obligation. The second is where what kind of employer this is becomes legible.

Two pieces get calculated separately and added together: the statutory entitlement and whatever the company adds on top.

The statutory piece, where the law provides one, scales with tenure and is indifferent to everything else. A common formula is one month's average pay for each year of continuous service, so someone earning $3,000 a month who stayed three years is owed roughly $9,000. The amount doesn't change based on who ended the job, on performance, or on the reason given. Statutes usually fix a payment deadline as well, commonly a couple of weeks after the last working day.

Additional pay gets added when the company is the one ending the job. It's normally assembled from four things.

1. A number of months of salary. Two or three is the common range, and some companies write it as a formula instead — two weeks per year of service, for example.
2. Unused leave, converted to cash and attached to the final paycheck.
3. Equity handling. Whether unvested shares simply lapse, or whether vesting is treated as continuing to the notice date, has to be decided rather than left implicit. Someone eleven months into a one-year cliff walks away with nothing under the first reading and a quarter of the grant under the second.
4. Support afterward: help finding the next role, continued health coverage for a period, keeping the laptop.

The company gets something in return. Additional pay is normally conditional on signing an agreement, which includes a promise not to litigate the matter. The signature gets collected after a review period. Pressing for it in the room where notice is delivered tends to put the validity of the agreement itself in question later.

The other audience for the number is everyone staying. That's why companies fix the formula before negotiating individually.

When someone resigns, only the statutory piece is paid. No additional pay attaches, and there's no reason for it to. What the company owes in this case is execution: settling final pay and unused leave on time inside the offboarding checklist.

Where additional pay actually gets designed is a layoff. Because the reduction comes from the business rather than from anyone's performance, the absence of fault is the grounds for adding pay. The criteria for selecting people and the compensation formula get written in the same document, and both are settled before any individual notice goes out. Deciding both in advance is what keeps the individual conversations short, because the answers to why me and why this much already exist in writing.

Negotiated departures fall in the same bracket. The company proposes and the person accepts, so terms come out of an agreement, and without a standard the results differ person to person. For executive roles the clause usually goes into the contract at hiring time.

Having no money to fund additional pay while cutting for financial reasons is a common bind. What remains available then is timing and information rather than cash: setting the final working day a month out and paying salary through it buys the person time to look. Companies that wrote this bracket into their compensation design in advance are the ones with options later.

"Statutory severance isn't negotiable. Three years of service fixes that number."

Separating the part set by law from the part the company decides.

"We standardized additional pay at two weeks per year of service."

Applying one formula instead of negotiating case by case.

"Take a week to review the agreement before signing."

No signature is being collected in the room where notice is given.

Pagedeck cut five positions in the quarter its runway shortened. What Grace built before any notice was the formula: two weeks per year of service with a two-month floor, unvested equity treated as vesting through the notice date, and the final working day set a month out.

Mia published that formula to everyone staying in the same week. The five people leaving received five different amounts, all from the same calculation, and once that was verifiable the questions in the following week's one-on-ones were about redistributing the work rather than about terms. What came up in exit interviews leaned toward handover as well.

The most common reading treats statutory severance as money the company provides if it can afford to. Both pieces arrive on the way out, so they look like one lump. But where the law grants an entitlement after a year of service, the company has no room to set the amount or defer the payment. Left uncorrected, the person treats something owed to them as a negotiation, and the company delays it against cash flow and collects late interest and a dispute together.

The other reading is that getting the number right closes the matter. Money changes hands and the case looks shut. But the people reading this handling most carefully are the ones who stayed. Two people in the same situation receiving different amounts becomes known within about a week, and from then on what the company has to explain is not the amount but whether a standard existed at all. A published formula survives that scrutiny; a set of individually negotiated numbers does not. Left uncorrected, the quarter after a reduction is when the remaining people start leaving on their own.