Under the ESA, severance entitlement is 1 week per year of service. How is the total severance calculated?

Under the ESA, severance entitlement is 1 week per year of service. How is the total severance calculated?

• A. Multiply the annual salary by the number of completed years.
• B. Multiply the average weekly earnings by the number of completed years.
• C. Multiply the weekly earnings by the number of completed months.
• D. Multiply the average weekly earnings by the total number of years including fractional years derived from completed months.

Answer: (D)

Under the ESA, severance pay is calculated as one week of pay for each year of service, including fractions for part of a year. The amount is based on the employee’s average weekly earnings, not an annual salary. To capture partial years, you convert completed months into a fraction of a year and add that to the completed years. So you multiply the average weekly earnings by the total number of years, including the fractional part from completed months. For example, if the average weekly earnings are $1,000 and the employee has 5 years and 7 months of service, you’d use 5 + 7/12 = 5.5833 years, and severance would be 5.5833 × 1,000 ≈ $5,583.33. The other approaches don’t fit because they use annual salary, ignore the fractional year, or mix units incorrectly.

Under the ESA, severance pay is calculated as one week of pay for each year of service, including fractions for part of a year. The amount is based on the employee’s average weekly earnings, not an annual salary. To capture partial years, you convert completed months into a fraction of a year and add that to the completed years. So you multiply the average weekly earnings by the total number of years, including the fractional part from completed months.

For example, if the average weekly earnings are $1,000 and the employee has 5 years and 7 months of service, you’d use 5 + 7/12 = 5.5833 years, and severance would be 5.5833 × 1,000 ≈ $5,583.33. The other approaches don’t fit because they use annual salary, ignore the fractional year, or mix units incorrectly.