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Accepting a Buyout

Accepting a Buyout

Accepting a Buyout

What you need to know about what a buyout is and how it affects unemployment benefits.

What is a buyout?

A buyout is a special package that gives the employee an option to leave the company in exchange for additional benefits.
Common reasons for buyouts include, but are not limited to:

  • Early retirement
  • Potential future layoff

Buyout vs Severance - What is the difference?

A buyout involves the worker agreeing to give up their rights to re-employment with the employer and choosing to end the employment relationship.

Severance pay is a payment paid by an employer to an employee who loses their job through no fault of their own. The employer is ending the employment relationship.

A buyout may include, in any combination:

  • Paying the worker for unused sick days
  • Unused vacation time
  • Retirement benefits like a 401(k) plan
  • Severance package*

*Severance packages can have additional impacts on unemployment. See Severance Pay: What You Need to Know (Fact Sheet 125) for more information.

How does a buyout affect unemployment benefits?

There is not a one-size-fits-all answer to this question. As a worker, the best way to know if you are eligible for unemployment is to apply.

The Unemployment Insurance Agency (UIA) will evaluate the reason for separation and the specifics of the buyout to determine how the buyout will affect benefits.

What to expect

  • Check MiWAM regularly. UIA will review the details of the buyout to determine how benefits will be affected. The UIA will issue a determination once the review is complete.
  • UIA may send communications by mail, online or by phone requesting more information. Respond by the due date provided in the communication. Failure to respond on time may result in the delay or denial of benefits, or penalties to the employer account.

 

Fact Sheet 129: Accepting a Buyout

Updated July 2026