Severance Calculator — what the offer is actually worth.

What a severance offer actually contains

A severance letter looks like one number and is usually four or five. The headline is weeks or months of salary. Underneath it sits notice, which is often a legal obligation rather than a gift; accrued leave, which is earned wages in several US states; a bonus you had already worked toward; and sometimes continuation of health cover for a fixed period. An offer that quotes three months and quietly states “inclusive of all accrued time and statutory notice” can be smaller than the statutory minimum you were entitled to before anyone offered you anything. Splitting the letter into those pieces is the whole job.

Run the numbers the way a payroll manager would, not the way the letter is worded. Weeks of pay, hourly equivalent, and the tax withheld at payment are three different calculations, and each one moves the number you actually receive.

How the calculator works

1. Salary to a weekly rate. Annual salary divided by 52, not by 12 then by 4.33 — the two differ by about 0.2%, which is a rounding argument you do not want to have with payroll over a 26-week package.
2. Service length. Enter years directly, or set your start date and let the page count it. A part year of six months counts as a half year in most policies and as a full year in some European statutory schemes; the calculation here uses the exact fraction, and states the rounded figure the policy would use.
3. The multiplier. Choose weeks per year (typical range 1 to 4) or months of salary (typical range 1 to 6). The page shows the effective weeks so the two forms are comparable.
4. Notice. Enter the notice weeks you are legally owed, then the notice weeks the offer actually pays. The gap is unpaid notice — the single most common omission in a first draft.
5. Everything else. Accrued leave days converted at your daily rate, plus any prorated bonus that was promised.
6. Tax. The estimate applies your combined marginal rate to the whole package, then shows what payroll will withhold if it uses the 22% supplemental rate. The difference is the April surprise.

A worked example: 6.5 years, one week per year

Salary $78,000, six and a half years of service, a policy of one week per year, six weeks of statutory notice of which the offer pays none, seven days of unused leave, and a $0 bonus. Weekly pay is $1,500. Six and a half weeks of severance is $9,750. Six weeks of notice is $9,000, seven days of leave is $2,100 at $300 a day, and the prorated bonus is $0.

Gross is therefore $20,850, or 13.9 weeks of pay. At a 25% combined marginal rate the net is $15,637.50. If payroll withholds at the 22% supplemental rate instead, you receive $16,263 now and owe roughly $625 when you file. That $625 is not an error; it is the gap between a flat statutory withholding rate and your actual bracket, and it is the reason a $20,850 letter feels like $16,263 for eight months and then like $15,637 later.

Now change one input: the same employer offers three months of salary instead, and says it is inclusive of notice. Three months is 13 weeks, or $19,500. Strip out the six weeks of notice you were owed anyway ($9,000) and the leave ($2,100) and the real severance is $8,400 — less than the one-week-per-year formula would have produced. Same headline, different money.

Where the calculation goes wrong

• Notice folded into severance. If statutory notice is two weeks per year of service and the offer is “four weeks inclusive”, you may be receiving the legal minimum plus one week, not a discretionary package. Ask for the breakdown in writing.
• Commission and bonus treated as discretionary. A salesperson on a 60/40 split who is let go in month eleven of a plan year has usually earned part of that bonus. Offers frequently omit it because the plan says “must be employed on the payment date” — a clause worth negotiating, not ignoring.
• Equity that stops vesting. Unvested shares rarely survive termination, and the notice period is often the only thing keeping the next tranche alive. Six extra weeks of notice can vest a tranche worth more than the cash severance.
• Health cover counted as cash. COBRA continuation at employer cost for three months is worth real money, but it is not salary and it does not pay rent in month four.
• Reemployment clauses. Some offers claw back part of the payment if you start a new job within a set window, or require you to repay it if you breach confidentiality. Read the repayment clause before you spend the money.
• Unemployment filed late. Most US states reduce benefits for weeks covered by severance, not cancel the claim. Waiting to file because the package looked large costs weeks of eligibility you never get back.

How this compares with hiring someone to work it out

An employment lawyer reviewing a settlement agreement typically charges $250 to $450 an hour in the US, and a review of a straightforward package runs one to three hours. That is worth it when the package is five figures and the release is broad. It is not how you find out whether the number is in the right postcode. Doing the arithmetic first means the paid hour goes on the clauses that matter — the release scope, the non-disparagement wording, the repayment trigger — instead of on a division you can do in a browser tab in ten seconds.

Questions people ask before signing