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Can you tell me if you can collect unemployment compensation in pa if your company eliminates your current position?

York, PA |

I have been working in middle management with my current employer for three years.I was informed this week that the company has eliminated my current position across the board, and is offering everyone in my position for a lesser management position with a pay decrease, or the option of severence pay. I am a single mother and thought this might be a good opportunity to go back to school with the help of unemployment and the aid of my 4 week severence pay. However, I am afraid if I take the offer and leave that I wont be entitled to any unemployment compensation. They gave us 4days to make our decision. I Any advice would be a great help.

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Best Answer

Yes, due to a change in the PA UC Law last year, receipt of a severance payment from your employer could affect your ability to receive UC benefits, depending upon the amount of the severance, and the amount you made each week while employed.

The new law says that the amount of severance pay exceeding 40% of the state-wide average annual wage, is deducted from a claimant's UC benefits on a weekly basis at the equivalent rate of the claimant's regular weekly wage at the time of separation, until that excess is exhausted.

This is easier to understand using real numbers. In 2012, 40% of the average annual wage for PA was $17,800.00. So, for example, if you received a severance from your employer that was worth $20,000.00, that severance exceeds 40% of the state average annual wage by $2,200.00. Therefore, the UC service center will calculate your regular weekly wage at the time of your separation and reduce your available UC compensation benefits by that amount each week until the $2,200.00 difference is exhausted. Therefore, still using this example, if you received a $20,000 severance from your employer, applied for UC benefits, were found eligible, and your regular weekly wage prior to your separation was $400/week, then you would not receive any UC benefits for the first 5.5 weeks of your benefit period ($2,200.00 divided by $400/week = 5.5 weeks).

If you receive a severance from your employer, the value of which is less than 40% of the state average annual wage, then you will not see any reduction in your weekly UC benefits as a result.


Yes. Mr. Davey has given an impressive and thorough answer and should be highly commended for it. I would take the money and go back to school.

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