Business & Work

You are allowed to get both severance pay and unemployment. In Illinois, severance pay is money you receive for work during employment. Since your severance pay isn't income, it shouldn't affect your unemployment benefits. However, if you keep working for your employer after you leave your job, severance pay may be considered wages and you may not be able to get unemployment benefits. 

Severance pay is money your employer pays you after you leave your job. Your employer pays you severance pay either because:

• They want to give you severance, or
• They must give you severance based on a contract you have with them.

Severance pay can include rights toward rank or pension. Severance pay is used to pay the bills until you can find a new job, but severance isn't wages.

Talk to a lawyer before signing any document accepting a severance package. You may be giving up your legal rights. Many employers pay severance so you don't take legal action against them. This does not mean that all employers who pay severance did something illegal. Usually, they did not, but want to make sure they are not going to get sued.

Can my severance payments come in over time rather than one payment? 

Yes. Your severance payments come in several payments or in one lump sum. As long as you no longer work for your employer, you may qualify for unemployment benefits. If you continue to work, then the severance pay may be considered wages. If so, the pay can prevent you from getting unemployment benefits or lower your benefit amount.