I want to give my employees severance. Will that negatively impact their Unemployment Insurance benefits? April 24, 2021 19:45 Updated No. Severance pay is not considered income. It does not have to be reported in a weekly claim for benefits. Related articles What if I have to lay people off or temporarily close my business because of issues related to COVID-19? How can I tell if my registration is complete? I am getting an error message prompt when I try to register. What should I do? Who is receiving unemployment benefits now that traditionally did not receive them? Do I still need to pay back my overpayment if the error was caused by the Employment Department?