When a severance offer lands, the first question is almost always the same: how is this number calculated, and is it in the normal range? This guide walks through the standard formulas US employers use, worked examples at different salary and tenure levels, the industry and seniority tables that move the multiplier, and the package components beyond base cash. Every figure here is an illustrative estimate, not a statement of what any specific person is owed; actual packages vary in both directions and are set by the employer's policy and the agreement's terms.
The Short Answer
The standard severance formula in the US is (weekly salary) × (years of service) × (multiplier), where the multiplier is most commonly 1 to 2 weeks per year of service, higher for senior roles and in higher-paying industries.
Worked example: on a $100,000 salary, weekly pay is $1,923 ($100,000 ÷ 52). After 5 years at a 2-week multiplier: $1,923 × 5 × 2 = an estimated $19,230 before taxes. At a 1-week multiplier the same profile produces roughly $9,615. That spread (not a single number) is the honest way to read the formula: it is a starting point for comparison, not a final figure or a legal entitlement.
The Weeks-Per-Year Formula, Step by Step
- Weekly pay: divide annual base salary by 52. Use current base salary only: most US formulas exclude bonuses, commissions, equity, and benefits, which are handled as separate items in the agreement.
- Years of service: most employers count completed years; some round partial years up as a goodwill gesture during a separation.
- Multiplier. The commonly reported bands:
- Entry-level roles: ~1 week per year of service
- Mid-level roles: ~2 weeks per year
- Senior/managerial roles: 2–3 weeks per year
- Executives: usually negotiated as flat periods (6–12 months) rather than weeks-per-year
How that plays out across tenure, as reported ranges (estimates, not entitlements):
| Years of service | Commonly reported severance range | |---|---| | Less than 1 year | 2–4 weeks | | 1–3 years | 4–12 weeks | | 3–5 years | 6–16 weeks | | 5–10 years | 10–26 weeks | | 10–20 years | 20–52 weeks | | 20+ years | 26–78 weeks |
For a deeper look at the long-tenure end, see severance after 10 years of service.
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Industry Changes the Multiplier
| Industry | Commonly reported range (per year of service) | |---|---| | Technology | 2–4 weeks | | Finance and banking | 2–3 weeks | | Healthcare | 1–2 weeks | | Manufacturing | 1–2 weeks | | Retail and hospitality | 0.5–1 week | | Government / nonprofit | Varies with contracts and policy |
The average severance package benchmarks page tracks these ranges in more detail, and the industry-level breakdown covers role-level differences within each sector.
Method 2: Lump Sum
Some employers skip the formula and offer a flat amount, often expressed as a fixed number of months of salary regardless of tenure. A flat 3-month offer is comparatively generous at 1 year of service and comparatively thin at 10 years, so the useful comparison is always against what the weeks-per-year formula would sketch for the same profile.
Method 3: Salary Continuation
Instead of one payment, pay continues on the normal schedule for a set period, and benefits may continue if the agreement and plans provide it. Continuation changes payment dates and payroll calculations but does not guarantee a different final tax result. In some states it affects when unemployment benefits can begin; the timing rules differ by state, and the severance and unemployment state-by-state guide covers how the main states treat it. The lump sum vs installments comparison works through the trade-offs in detail.
Factors That Move the Number
- Tenure: the input most formulas weight most heavily.
- Position level: the same tenure at different levels commonly produces different multipliers.
- Company policy and financial health: the controlling documents for any specific offer; companies in distress sometimes offer less than their historical pattern.
- Reason for separation: mass layoffs usually come with standardised packages, while individual role eliminations are more often negotiated case by case.
- State law: no state sets a general severance amount, but New Jersey and Maine mandate severance in certain covered mass layoffs, and WARN-type notice rules can add pay in lieu of notice.
Worked Examples
Mid-level, technology, 3 years: $120,000 salary ($2,308/week) × 3 years × 2 weeks = an estimated $13,848 before taxes.
Senior manager, finance, 7 years: $180,000 salary ($3,462/week) × 7 years × 3 weeks = an estimated $72,702 before taxes.
Entry-level with a flat offer: $65,000 salary offered 2 months. $65,000 ÷ 12 × 2 = an estimated $10,833 before taxes, above what a 1-week-per-year formula would sketch at short tenure.
All three are illustrative gross estimates. Withholding is a separate calculation: the severance tax calculator models federal and FICA rules under explicit inputs and requires a state assumption confirmed with payroll or the relevant state agency.
Reading an Actual Offer Against the Formula
Many people compare their offer against the low, typical, and high ends of the ranges above rather than a single target number. An offer near the bottom of the range for your tenure and industry is context worth knowing; many people in that situation consider asking whether the package is negotiable, and some choose to have an employment attorney review the agreement, particularly where it includes a release of claims, equity, a non-compete, or a short signing deadline. Whether and how to negotiate is a decision only you can make; the negotiation guide covers the factors people commonly weigh.
Beyond the Cash: Total Package Value
A complete package can include continued health coverage (COBRA subsidies), accelerated equity vesting, bonus pro-ration, outplacement services, and reference terms. These components can add materially to the total value (sometimes 20–50% for equity-heavy roles), so the cash formula is only the starting point for evaluating the whole agreement. The free severance calculator applies the formula above with industry and role ranges and adds state employment-law context, with the full method on the methodology page.