Can I Get Workers’ Compensation Benefits and Severance Pay?

Suppose you receive workers’ compensation wage loss benefits and were hurt in Pennsylvania. In that case, your Employer is generally entitled to credit for any severance or separation payments it makes to you. However, the Employer is only entitled to a credit for the net amount you receive—not the gross amount it paid. So, the short answer is: “Yes, you technically can receive workers’ compensation benefits and severance payments at the same time, but the Employer will get a credit for the net amount of severance you received.”

In a recent Pennsylvania Commonwealth Court case, the employee had a physically demanding job in a township public works department. He went out on paid leave related to an ongoing right knee injury but did not return to work. His union then negotiated a separation agreement in which he agreed to resign and release his Employer from liability for specific legal claims in exchange for one year’s salary. One month later, the employee filed a workers’ compensation Claim Petition alleging that his knee injury was work-related and seeking workers’ compensation wage loss and medical benefits. That began a fight over whether the Employer was entitled to a credit for the severance payments and how much of a credit.

The Pennsylvania Workers’ Compensation Act clearly states that an Employer is entitled to credit for severance payments it makes. The Court rejected the employee’s argument that the payments were not severance but just payments that his union negotiated for him to receive in exchange for releasing his claims against the township and his resignation. The Court determined that simply because there was a negotiated agreement does not mean they are not severance payments.

However, the critical point the Court clarified is that the Employer only gets credit for the net amount it paid, not the gross amount. Otherwise, the Employer would unfairly get a greater credit than you received in severance.

Our office regularly fights for injured workers to get them the wage loss and medical benefits they deserve. If you have a claim or think you do, call our office at 610-446-3457 or click here to send an email to set up a consultation with one of our attorneys. We will explain the process, guide you, and fight to get you the recovery you deserve.