How to Handle Severance Agreements for Part-Time Workers

When part-time employees are laid off or terminated, many HR professionals wonder whether severance agreements for part-time workers are really necessary. While severance is more commonly associated with full-time roles, understanding how to approach severance for part-time employees is essential for protecting your organization and maintaining a strong employer brand.

Let’s dive into the key considerations around severance pay eligibility, benefits, and how to craft fair, legally sound severance agreements for part-time workers.

There’s no federal law requiring employers to offer severance pay to part-time employees—or to any employees, for that matter. Severance policies are typically governed by company policy or individual contracts. 

That said, part-time workers may still be eligible for severance if they meet certain criteria, such as:

• Lengthy tenure at the company.
• Inclusion in a broader layoff event.
• Being part of a protected class.
• Risk of potential legal action such as wrongful termination claims.

Employers should carefully assess risk and equity when deciding whether to extend termination benefits to part-time employees.

In most cases, severance pay is not mandatory for part-time workers unless stipulated by a contract, collective bargaining agreement, or company severance policy. 

However, providing severance pay can help to:

• Mitigate legal risk.
• Maintain employee goodwill.
• Prevent negative public perception.
• Support employees during transition.

Even if part-time workers are not legally entitled to severance, offering it proactively can be a smart move for employers navigating layoffs.

If you’re conducting a mass layoff involving both full- and part-time staff, consider offering severance across the board to avoid legal or reputational fallout.

Imagine a part-time worker who’s been with your company for years and now has to watch their full-time peers receive severance benefits while they’re left empty-handed. This perceived unfairness could lead to legal disputes. Even if those disputes don’t hold up in court, they can cause lasting damage to a company’s reputation and culture.

To help you make the strategic decision whether to use severance agreements for part-time workers, ask yourself:

• Is this person likely to pursue legal action?
• Have they worked with the company for a long time?
• Would denying severance seem unfair compared to their full-time peers?

Remember, offering severance is only one of many helpful steps to ensure a successful layoff. Click below to download our free essential layoff guide to help you prepare severance packages and everything else needed for a smooth reduction event for both you and your employees.

There’s no one-size-fits-all formula for calculating part-time employee severance pay. 

However, many organizations base these part-time employee severance calculations on:

• Average weekly hours worked.
• Length of service or employment.
• Role and responsibilities.
• Any prior agreements or union contracts.

Here are a few examples of how severance might be calculated for part-time workers:

• Prorated by hours worked: If a full-time employee receives two weeks of severance for each year of employment, a part-time employee working 20 hours per week (half-time) might receive one week per year instead.
• Flat severance payment: Some companies provide a fixed severance amount—like $1,000 or two weeks worth of pay—regardless of whether the employee was full-time or part-time, to simplify the process.
• Tiered severance structure: Employers may group employees into tiers (e.g., full-time, part-time over 20 hours per week, part-time under 20 hours per week) and apply different severance formulas based on the tier.
• Hybrid method: An organization might offer one week of severance per year of employment, calculating that weekly amount based on the employee’s average pay over the last six months. This accounts for fluctuating schedules common in part-time roles.
• Union or contract-specific terms: If the employee is covered under a union contract or signed employment agreement, the severance calculation must align with those terms, which may include specific formulas or minimum payouts.

Whether you’re creating severance agreements for full-time or part-time employees, the basics remain the same. 

A strong severance agreement should include:

• Final paycheck details.
• Severance pay terms (e.g., amount, timing).
• Continuation or cancellation of employee benefits.
• Waiver of legal claims (to help prevent lawsuits).
• Return of company property.
• Non-disparagement and confidentiality clauses.

Make sure that all of these documents are reviewed by your legal counsel to comply with local, state, and federal laws, as well as EEOC guidelines.

To further support laid-off employees, consider bundling your severance agreements for part-time workers with outplacement services. 

These outplacement services:

• Help employees find new jobs faster.
• Include personalized career coaching and resume support.
• Demonstrate that your company truly cares about its people.

Offering both severance and outplacement support sends a powerful message of respect and empathy to employees, while also protecting your brand.

While severance pay is often associated with full-time employees, it’s important not to overlook the unique considerations for part-time workers. Crafting thoughtful, equitable severance agreements for part-time workers can reduce risk, demonstrate fairness, and protect your company’s reputation.

Here are the key takeaways:

• Part-time employee severance pay isn’t legally required, but offering it can help mitigate legal and reputational risk.
• Severance pay eligibility should be based on additional factors beyond employment status, like tenure, job classification, and potential legal exposure.
• A fair severance agreement should include terms around payment, benefits, legal waivers, and confidentiality.
• Having a clear, documented company severance policy for both full-time and part-time employees ensures consistency and fairness.
• Bundling severance with outplacement support adds real value to the employee experience and reinforces a positive employer brand.
• Consistency in how you treat all laid-off employees is key to avoiding claims of unfair treatment.

If you’re ready to find the right outplacement firm to help you successfully protect and enhance your organization’s reputation during your next layoff or reduction event, click below to speak with our experts and learn more about Careerminds’ industry-leading outplacement offerings.