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Comment by jklein11 | Hacker News Reader

Most employees in the US are hired at will. This means that the companies are not obligated to continue to offer their employees work. Severance is usually paid by the employer so that the employee agrees to leave amicably and does not sue for wrongful termination.

Which country do you live in? Is it common practice for all employees to have severance negotiated as part of an employment contract? What happens if the employee decides to leave the employer before the contract expires?

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In Belgium, they used the "Claeys formula" for many cases: https://en.wikipedia.org/wiki/Claeys_Formula. (I believe they use something different now, but it's hard to imagine that unions would have allowed a significant relaxation of the earlier rules, so it's still a good first order approximation.)

Some examples:

- somebody who makes 5000 euro gross per month who's 20 years with the same company would get ~15 months severance.

- somebody who makes 3000 euro gross who's 5 years at a company would get 7 months of severance.

Interestingly enough, the age of the employee is a factor of the equation!

When it's the employee who decides to leave the company, the company can require them to stay on for many months, again depending on how long the employee was with the company. Or the company can agree to release earlier, but it will still be on the hook for a significant amount of months of salary.

Let's just say that the decision to hire an engineer isn't done lightly.

In Australia it's not negotiable. Our employment laws dictate what severance payment is required if a company is letting people go to reduce costs. Those laws don't apply if the employee leaves of their own accord, or if they are fired for other reasons.

Is that in addition to or instead of unemployment insurance? That’s probably the most similar construct in the US.

I suppose it would be "instead of". Unemployment insurance isn't really a thing here.

Then the situation is maybe not so different? It's an amount you're entitled to when laid off, set by the government, which your employer has to fund proactively (payroll taxes).

Because it's set by the government, it caps out at well below a typical tech worker's burn rate, so it's little more than a brake on the depletion of our savings. When a tech company offers severance it's typically much, much more than what the government guarantees.

You also get the full amount regardless of how long you're unemployed, so e.g. if you get laid off with 7 weeks severance and find another job in 3 weeks, that's a free month of salary.

It's fulfilling the same role, definitely.

In our case, the payout is defined as 4-12 weeks of salary (plus 1-4 weeks notice), based on length of tenure. Since this scales with what people earn, there's little need for tech companies (or other well-paid fields) to offer anything extra.

On a related note, Australians are also entitled to 4 weeks paid leave per yer, which accrues if not taken. Employers are also required to pay out any leave balance (even if the employee leave voluntarily), which means most workers will have at least a couple of additional weeks paid out on top of the severance.

It's the same here, in that you get the full amount regardless of how long you're unemployed after they let you go.

We don't have unemployment insurance in Australia, we don't really need it.

That's not true, it does exist:

https://www.finder.com.au/unemployment-cover

No idea how common it is, though.

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