When Does Severance Take Place and Why Your Final Paycheck Might Be Late

Getting laid off is a gut punch. You’re sitting in a glass-walled conference room or staring at a Zoom screen, and suddenly your Slack access is gone. Once the initial shock wears off, the very first question everyone asks is: "When do I actually get the money?" It’s a fair question. You have rent, car payments, and grocery bills that don't care about your "restructuring" phase.

Honestly, the timing of when does severance take place isn't as straightforward as a regular Friday direct deposit.

There is a massive difference between what the law requires and what your company’s HR manual says. Most people assume the check arrives the moment they hand in their laptop. That rarely happens. In reality, you're looking at a timeline influenced by state labor laws, the Age Discrimination in Employment Act (ADEA), and how fast your former boss’s accounting department moves. If you are over 40, the federal government actually forces you to wait. It’s a weird quirk of the law designed to protect you, but it feels like a penalty when you need the cash.

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The Waiting Game: Understanding the Legal Cooling-Off Period

If you are wondering when does severance take place, you have to look at the calendar. For many workers in the U.S., the process starts with a "consideration period."

If your employer is offering you a severance agreement in exchange for a release of claims—basically, you promise not to sue them—they usually have to give you time to think about it. If you’re over 40 years old, the Older Workers Benefit Protection Act (OWBPA) kicks in. You get at least 21 days to consider the offer if it’s an individual layoff. If it’s a group layoff (two or more people), that window jumps to 45 days.

Then comes the "revocation period." This is a seven-day window after you sign the document where you can legally change your mind. Your company isn't going to send a dime until that seventh day passes. They aren't being mean; they just don't want to pay you and then have you rescind the agreement the next morning. So, at a minimum, many people are looking at a week of dead air after they sign the paperwork before the money even enters the banking system.

State Laws vs. Company Policy

California is different from Texas. New York is different from Florida.

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In California, under Labor Code Section 201, earned wages are due immediately upon discharge. But severance isn't "earned wages" in the same way your hourly pay is. It’s a gift—or a bribe, depending on how cynical you are—given in exchange for your signature. Because it's a contract, the timing is dictated by the contract itself.

Look at your separation agreement. There is usually a clause that says something like, "Payment will be made within 14 business days following the expiration of the Revocation Period."

Business days. Not calendar days.

That means weekends and bank holidays don't count. If you sign on a Wednesday, and there's a Monday holiday, you might be waiting three weeks. It’s frustrating. It’s slow. But it’s legal. Companies like Google or Meta, during their large-scale layoffs in 2023 and 2024, often stuck to a 30-to-60-day window for total payout completion, especially when dealing with COBRA subsidies and prorated bonuses.

The Lump Sum vs. Salary Continuation

Companies usually pay out in one of two ways.

1. Lump Sum: You get one big, fat check. It looks great on paper until you see the taxes. Because severance is often "supplemental wages," the IRS likes to see a flat 22% withheld for federal taxes right off the top.
2. Salary Continuation: You stay on the payroll for a set number of months. You get a check every two weeks just like you did when you were working.

Salary continuation is often better for your mental health and your health insurance, but it can complicate your unemployment filing. In many states, you can’t collect unemployment benefits while you are receiving salary continuation because the state considers you "not fully unemployed." If you get a lump sum, you might be able to start unemployment much sooner. It’s a trade-off.

Why the Delay Happens Behind the Scenes

HR departments are often overwhelmed during layoffs. If a company lets go of 500 people, the payroll team has to manually audit 500 final checks, calculate unused PTO, and verify that 500 signed agreements were returned without unauthorized edits.

Sometimes, the delay is just human error.

I’ve seen cases where a former employee’s direct deposit info was purged from the system the day they were terminated, so the company tried to mail a paper check to an old address. If you haven't seen your money within 14 days of your revocation period ending, you need to start making noise. Send a polite but firm email to your HR contact. Don't be "the person who's just checking in." Be the person who is "inquiring about the status of the contractually obligated payment due on X date."

The "Notice Pay" Factor

In some industries, specifically in the UK or under the WARN Act in the US, you might receive "pay in lieu of notice."

The Worker Adjustment and Retraining Notification (WARN) Act requires employers with 100 or more employees to provide 60 days' notice of a plant closing or mass layoff. If they want you gone now, they have to pay you for those 60 days. This often gets lumped into the severance conversation, but it's technically different. When does severance take place in a WARN situation? Usually, the notice pay starts immediately, but the extra "severance" on top of that might not hit until the full 60-day notice period has officially expired.

How to Handle the Gap

While you're waiting for that money to hit, you have to be tactical.

First, check your final regular paycheck. It should include all your hours worked up to the minute you were let go. In many states, it must also include your accrued, unused vacation time. If that check is wrong, fix it immediately. It’s your leverage.

Next, look at your 401(k). If you have an outstanding loan against your retirement account, the company might try to offset your severance to pay back the loan. They can't always do this legally without your consent, but it happens. Read the fine print of your loan agreement.

Practical Steps for the Waiting Period

• Get it in writing. Don't rely on a verbal "we'll take care of you" from your manager. If it isn't in the signed separation agreement, it doesn't exist.
• Update your contact info. Ensure HR has a personal email and a current mailing address. Once your work email is dead, you’re invisible to them.
• Track the Revocation Period. Mark the 8th day after you sign your agreement on your calendar. That is the day the clock starts ticking for the payroll department.
• Check your state’s "Final Pay" laws. Even if the severance is delayed, your regular wages usually have very strict, fast deadlines.
• Don't spend it before you have it. Severance is often taxed more heavily than you expect. If you're expecting $10,000, plan for $6,500 to $7,000 actually hitting your bank account.

The reality of when does severance take place is that it's a bureaucratic process. It’s a transition from being a human "asset" to a line item on a spreadsheet. It takes time to move through the machine. Generally, if you haven't seen the funds within 30 days of your last day on the job, it’s time to consult an employment attorney to ensure the company isn't breaching the contract you both signed.

Actionable Steps for Your Next Move

1. Verify the "Sign-By" Date: Locate your separation agreement and confirm the deadline for your signature. Missing this date can void the entire offer.
2. Calculate the "Effective Date": Add 7 days to the date you plan to sign. This is the "Effective Date" when the agreement becomes legally binding.
3. Draft a Follow-Up Email Template: Prepare a short note to send to HR exactly 10 business days after the Effective Date if the funds haven't arrived.
4. Consult an Accountant: Before the money hits, ask a professional how much you should set aside for the tax "true-up" next April.
5. File for Unemployment Immediately: Do not wait for the severance check to arrive. File the day after your last day of work; the state will determine when your eligibility starts based on your specific payout structure.