Q: I received a "severance" offer after being terminated can I accept this severence and still collect unemployment?

A: Severance Pay and Illinois Unemployment Benefits

In most states, an employee can collect unemployment benefits only if it’s the employer’s fault you lost your job. For example, if your company can’t afford to pay you anymore or doesn’t like how you perform your job, the unemployment office will likely determine you are eligible to collect benefits as long as you are able and available to start a new job. Sometimes employers will try to limit your collection of unemployment benefits in a severance agreement by writing a clause that states “You agree not to collect unemployment benefits while you are receiving severance pay”. Terms that limit your ability to collect unemployment benefits, even if you don’t think you need the benefits, should be challenged. This is because it’s allowable to collect severance pay and unemployment benefits at the same time.

*In Illinois, you can collect severance pay and unemployment benefits simultaneously. According to Section 2920.45, amounts paid or payable to the individual as severance pay shall not render the individual ineligible to receive benefits under Section 2920.5. The nature and purpose of such payments, rather than their characterization, shall determine whether or not such payments are considered severance pay under this Section.

See Ill. Admin. Code tit. 56 § 2920.45

Weblink: https://casetext.com/regulation/illinois-administrative-code/title-56-labor-and-employment/part-2920-disqualifying-income-and-reduced-benefits/subpart-a-general-provisions/section-292045-severance-pay