Employee Benefits When You Leave Your Job

Person leaving job
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Have you recently left your job, or are you about to move on? Whether you quit or were terminated, you may be entitled to certain employee benefits.

It pays to learn as much as you can about these benefits before you move on to something new. In many cases, it’s harder to learn about your rights when you’ve already turned in your lanyard or equipment and lost your face-to-face access to HR.

Employee Benefits When You Leave a Job

Learn more about unemployment insurance, severance packages, giving notice, writing a resignation letter, health insurance, retirement plans, workers compensation, disability, references, and other potential benefits, so that you know what to ask before you go.

Quitting Your Job

Providing two weeks' notice is customary. Even if your employer doesn't ask for notice, it is a good idea to offer it. Even though it's not easy, it is best to tell your boss in person. Try to remain positive since you may need a reference in the future. In some cases, you will need to resign in writing.

A well-written resignation letter can help you maintain a positive relationship with your old employer while paving the way for you to move on. Networking isn’t just something that happens at formal networking events. Keeping ties to your former colleagues will help you grow a robust network that will help you grow your career for years to come.

Getting Fired

Getting fired can happen to the best of us. Sometimes there's a personality conflict. In other cases, the job can be difficult or there simply may not be a good match between you, the job, and/or the company.

Try not to take it personally. It doesn't mean that you are a failure. Rather, it means that you weren't meant to be doing this job. Many famously successful people were fired at some point in their career. This experience may lead you to better opportunities.

Managing a Lay-Off

If you’ve been laid off, you’re also in good company. The Bureau of Labor Statistics reports that layoffs and discharges increased by 88% from 2019 to 2020. Depending on your industry and the economy, you can find yourself out of a job through no fault of your own.

But even when you know you didn’t do anything to cause your termination, losing your job is stressful. The best thing to do is to learn about the benefits you’re entitled to receive as a former employee. In addition to unemployment insurance, health insurance, and pension benefits, you may be offered a severance package.

Note

Companies aren’t obligated to provide severance pay; however, depending on circumstances, they may do so anyway.

Employment-Related Benefits

Before you leave your job, you will need to know what benefits you are eligible for. You are entitled to receive some benefits by law. Your employer may opt to provide additional benefits other than those mandated by state or federal law.

Ask about severance pay, accrued vacation, overtime and sick pay, pension benefits, and eligibility for unemployment insurance. Request information on the continuance of health and life insurance benefits.

Note

If you have any questions on what is offered, check with your human resources department or state department of labor for clarification.

Unemployment Benefits

Don't wait to file for unemployment. The sooner you file, the sooner you will start receiving checks. Look up the details on where to file for unemployment, how to file, what you need, eligibility requirements, disqualifications, extended benefits, and more unemployment insurance information.

Health Insurance (COBRA)

Your employer, if the firm has over 20 employees, is mandated by law to offer health insurance coverage through Cobra to terminated employees for 18 months. You will need to pay for this coverage. In some cases, employers will pay for coverage for a limited time as part of a severance package.

Note

Some states have laws similar to COBRA, called mini-COBRA, including some legislation that applies to employers with less than 20 employees.


Health Insurance (Marketplace)

The government's Health Insurance Marketplace provides individuals a way to shop for coverage on their own, to see how individual and family plan prices compare to COBRA, and decide which option is the best for you.

Pension and Retirement Plans

You may be entitled to pension and retirement fund benefits after you terminate employment. If you are enrolled in a 401(k), profit sharing, or another type of defined contribution plan, your plan may provide for a lump-sum distribution of your retirement money when you leave the company. If you are a participant in a defined benefit plan, your benefits will begin at retirement age.

Pay for Unused Time Off

The federal government doesn't require payment for unused sick or vacation leave when you leave a job. However, some states have legislation that requires payment, and some companies have policies that provide for payment of unused time off.

Federal Law

There is no federal law requiring employers to pay out unused paid time off, including vacation time, after an employee leaves a company. The Fair Labor Standards Act (FLSA), which sets regulations for wages and overtime, does not mandate payment for unused vacation or sick time.

State Law

Some states have laws that require payment for unused vacation or sick time if you quit your job or you're fired. Check with your state department of labor for the law in your location.

Company Policy

Your employer may have a company policy that provides payment for unused time off when you leave a job. Check with your manager, human resources department, or employer handbook for information on what you're eligible to receive.

Severance Pay

Employers aren't required to provide terminated employees with severance pay, but some opt to offer it when an employee is terminated. Severance packages, if provided, typically include one to two weeks of pay for each year of service.

Workers' Compensation and Disability Insurance

Are you unable to work because of an injury or illness? If so, you may be eligible to receive workers' compensation or disability benefits.

Getting References

Having good references can be the clincher that gets you that new job. Here's how to request references and how to write them. Don't wait to ask for a reference. Whether you have been laid-off or you resigned, ask while your employer still knows who you are. If you have been fired, you may be able to ask a colleague for a reference.

Key Takeaways

Find Out What Comes Next: Whether you leave voluntarily or after a termination, you may be entitled to benefits.

Get Information About Your Benefits: These benefits may include severance pay, health insurance, accrued vacation, overtime, sick pay, and retirement plans.

Companies Aren’t Obligated to Provide Severance: However, many employers will offer a package anyway.

Line Up References Before You Leave: Even if you’re fired or laid off, it pays to ask what your former employer will say about you to prospective employers in the future.

The information contained in this article is not legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. 

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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. SHRM. "Can Employers Require Workers to Give Notice Before They Quit?" Accessed Jan. 5, 2022.

  2. U.S. Bureau of Labor Statistics. "Job Openings and Labor Turnover Trends for States in 2020." Accessed Jan. 5, 2022.

  3. U.S. Department of Labor. "Termination," Accessed Jan. 5, 2022.

  4. U.S. Department of Labor. "FAQs on COBRA Continuation Health Coverage for Workers." Accessed Jan. 5, 2022.

  5. U.S. Department of Labor. "Vacation Leave." Accessed Jan. 5, 2022.

  6. SHRM. "Designing and Administering Severance Pay Plans." Accessed Jan. 5, 2022.

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