The Connecticut Department of Labor provides unemployment benefits to workers who lost their jobs. While you must meet certain eligibility standards to receive benefits from the department, receiving severance pay or vacation pay as part of your termination agreement may not disqualify you from receiving weekly benefits. Depending upon the amount of severance you receive, the methods in which you were terminated and the benefit amount to which you are entitled, severance payments may only reduce your weekly benefits or not interfere with them at all.
Being without a job doesn't automatically qualify you for unemployment benefits in Connecticut. To qualify for benefits, you must be unemployed through no fault of your own -- that is, you can't have been fired for cause -- able to work, registered with the state's Career Center and actively seeking work. Most workers are covered by the state's unemployment benefits, although self-employed workers, railroad workers, workers in commission-based real estate positions, most insurance agents, children under 18 who deliver newspapers and most workers employed by immediate family do not qualify for unemployment benefits.
If you're eligible to receive unemployment benefits, the Department of Labor uses your earnings history to calculate your weekly benefit amount. The department collects information on your four most recent quarters of employment, averages the earnings from the two quarters where you earned the highest wages and provides you with 1/26th of that figure as your weekly benefit amount. You must have earned at least 40 times your weekly benefit amount in the previous four completed quarters to be eligible for benefits. Beneficiaries with dependents may receive an additional $15 per dependent up to a maximum of $75 per week.
Severance Pay and Benefits
If you receive severance pay as part of your termination agreement, it may reduce your overall benefit amount. You must report any severance pay to the Department of Labor when you file your initial claim. If you receive a severance package after you begin to receive unemployment benefits, it must be reported on the TeleBenefits line when you receive it. In some cases, income from severance pay may reduce your weekly benefit amount by up to 100 percent, although benefit reductions aren't always necessary when a beneficiary receives severance, particularly if you were required to sign a release of claims contract to receive your severance pay.
Temporary Benefit Adjustment
In many cases, if severance payments impact your eligibility to receive your full weekly benefit amount, or if your benefit was withheld for a week because you received severance pay, the reduction is only temporary. If reported correctly and legally, your remaining weekly benefits may remain unaffected. If you receive severance pay and don't report it to the Department of Labor, you may become ineligible to receive further benefits.