[analog31]

In the US, we have unemployment compensation insurance for that purpose. I believe you can collect unemployment even if the employer is insolvent, because it's pre-paid by the employer, and comes out of a collective fund.

As I understand it, a severance usually involves the employee signing some sort of agreement.

[closeparen]

Unemployment insurance in California maxes out at $450/week, pre-tax. It can help you draw down your savings more slowly, but by itself is not even enough to make rent. The numbers may have made sense before the latest bout of housing price and wage inflation, but they don't anymore.

[nradov]

There are still places in California where it's possible to rent for <$1800/mo.

[fphhotchips]

Right, but who's renting them when they're on an engineer's salary? You can't just up and move instantly upon finding out you're in the unemployment line.

[closeparen]

You pay rent with after-tax money. No way are you renting for $900.

[throwaway2048]

what a bargin

[adamredwoods]

For a family?

[chii]

So who pays for this insurance? Is it usually the company, or the employee?

[btilly]

Employers. See https://workforcesecurity.doleta.gov/unemploy/uifactsheet.as... and https://en.wikipedia.org/wiki/Unemployment_benefits#United_S... for more information about it.

Note that the caps are per state, but is sufficiently low that it doesn't replace a professional level income. Therefore if your lifestyle is based on an income of $50K+, you are strongly advised to acquire personal savings for emergencies in case you lose your job. And C-level executives frequently have contracts which specify severance packages that guarantee their income for an extended time if they are fired. See https://en.wikipedia.org/wiki/Golden_parachute for more on that.

This can lead to weirdly misaligned incentives, like C-level executives on a failing company trying to get fired because their severance package will leave them better off than staying with the sinking ship.

[otoburb]

>>This can lead to weirdly misaligned incentives, like C-level executives on a failing company trying to get fired because their severance package will leave them better off than staying with the sinking ship.

If anybody is fired in the U.S. they are almost always never entitled to severance. Severance is primarily available for employees who have been laid off. Such companies would love to fire executives in the true sense of the word if they had cause to save on any costly packages.

[btilly]

A contract can say whatever it says. If it says that in event of your being asked to leave the company that you get 6 months salary, then you get 6 months salary upon being asked to leave. Regardless of why you're asked to leave the company.

This kind of contract term is not given rank and file employees. But I personally know executives who have been fired and kept a salary because it was in their contract, including one who was fired in the last year, and another who maneuvered to get fired a few years ago because the company was going out of business.

[analog31]

There can be a lot of confusion about what "fired" means. Most US states have "employment at will," meaning that there is no implied contract, and an employee can be terminated without giving a cause. Yet in the common parlance, "fired" means "terminated with cause." If an employee has been terminated with cause, they know it.

Also, companies avoid the term "layoff" because it could imply that an employee is entitled to be re-hired if business conditions improve. This can be the case in union shops. The term I've heard for a permanent termination without cause is "reduction of force."

Companies have to be careful about using "with cause" because they can get sued over it unless they absolutely have all of their ducks in a row. They will often pay the severance rather than expose themselves to a lawsuit and discovery process. They may also wait until there's a downturn, and get rid of the low performers all at once.

Of course like you say, if there's a contract, it can say anything.

[s73v3r_]

Both.