Unemployment Compensation and Severance Pay in New Jersey

In New Jersey, an individual who receives severance pay or a severance agreement from a company may also apply for unemployment compensation.  The caveat is that the severance pay must not extend the individual’s employment.

For example, if you receive a lump sum amount of severance, you may apply for unemployment.  However, if you are terminated and the company pays severance which keeps the individual on the company’s payroll for an additional 6 pay periods, the individual is not entitled to unemployment compensation.

Accordingly, individuals may want to request that severance pay be paid in a lump sum in order to simultaneously collect unemployment compensation.

You should feel free to call our firm at (973) 920-7888 for a free consultation.