Severance pay is compensation paid to an employee when an employer terminates employment. Severance includes, but is not limited to, retirement bonuses and commutation of unused sick or personal leave. It is Indiana law to report your employee’s severance.

When uploading your wage and contribution file, remember to submit severance pay in the appropriate fields. If this does not happen, a member’s annual salary is affected, resulting in a miscalculation of the member’s benefit. For a quick review of this step, refer to the ERM Wage and Contribution Manual and our Employer Reporting and Maintenance (ERM) Wage and Contribution (W&C) File Layout Specification.

Below is a screenshot of how severance pay can be reported manually through the online entry in the system.