Virginia Severance Pay Laws (2026): Is Severance Required?

We found no Virginia law that requires a private employer to pay severance. In Virginia, statutory severance exists only for state employees: the Workforce Transition Act gives eligible full-time Commonwealth employees who are involuntarily separated for reasons other than performance or misconduct 4 to 36 weeks of salary (Va. Code 2.2-3203).

Since July 1, 2026, severance also matters for some non-competes. For a non-compete entered into, amended or renewed on or after July 1, 2026, a covenant not to compete is unenforceable if the employer discharges the employee without severance benefits or other monetary payment, unless the discharge is for cause (Va. Code 40.1-28.7:8(C)). The 2026 act does not affect agreements entered into, amended or renewed before that date (2026 Acts ch. 883, cl. 2). For how other states handle severance and the federal rules in depth, see our severance pay laws by state guide.

Information last verified on October 8, 2026. This article has not been reviewed by a licensed lawyer.

Jurisdiction scope: This article covers Virginia's Workforce Transition Act for state employees (Va. Code 2.2-3200 to 2.2-3204), the 2026 non-compete severance rule (Va. Code 40.1-28.7:8(C)), Virginia wage law as it bears on promised severance (Va. Code 40.1-29), the unemployment rule for severance (Va. Code 60.2-229) and Virginia limits on agreement terms, with short notes on the federal rules that apply in Virginia. It does not cover when your last regular paycheck is due; see Virginia final paycheck laws. It does not cover benefit amounts or how to file for unemployment; see Virginia unemployment benefits.

Is severance pay required in Virginia?

Not for private-sector workers, as far as we could find. We reviewed the section list of the Virginia Code's wage-payment chapter (Title 40.1, chapter 3), the wage statute (Va. Code 40.1-29), the non-compete statute, the unemployment definitions in Title 60.2 and the state-employee severance chapter in Title 2.2. The only severance mandate we found is the Workforce Transition Act, which covers state employees. We could not run a full-text search of the whole Code, so treat this as the result of a targeted review, not an exhaustive one.

Federal law does not require severance either. The U.S. Department of Labor says, "There is no requirement in the Fair Labor Standards Act (FLSA) for severance pay," and treats severance as a matter of agreement between employer and employee.

So for most Virginia workers, severance depends on what the employer offered or promised. For when an employer may end a job in the first place, see our Virginia at-will employment page.

Severance for Virginia state employees: the Workforce Transition Act

The Workforce Transition Act of 1995 (Va. Code 2.2-3200 to 2.2-3204) is Virginia's only statutory severance entitlement. Under 2.2-3203, an eligible employee "shall be entitled to receive a transitional severance benefit equivalent to four weeks of salary," with more for longer service.

Who is eligible

The Act covers full-time Commonwealth employees under the Virginia Personnel Act, along with certain groups the statute lists that are otherwise exempt from it, including employees of the State Corporation Commission, the Virginia Retirement System and the Virginia Lottery, certain university hospital employees, and faculty (Va. Code 2.2-3202). To qualify, the employee must be involuntarily separated for reasons other than job performance or misconduct, with no available position at the same salary and location. Members of the Judicial Retirement System and elected officers are excluded, and positions funded by federal project grants are excluded unless the funder agreed to pay the benefit (Va. Code 2.2-3202(B), (C)).

The Act does not apply to employees of a public university that operates under a management agreement with the Commonwealth (a "covered institution") who participate in the university's own human resources program, a group that includes all of its faculty and all University of Virginia Medical Center employees. Those universities must adopt their own severance policy covering voluntary and involuntary separations, with terms set by the university's governing board (Va. Code 23.1-1026; 23.1-1000).

How the benefit is calculated

Above two years, the statute counts consecutive service to the Commonwealth. Partial years are rounded up (Va. Code 2.2-3203). The employee also keeps state health and group life coverage for 12 months, with the agency paying its share, and then may continue coverage under COBRA. An eligible employee who is a vested member of the Virginia Retirement System, State Police Officers' Retirement System or Virginia Law Officers' Retirement System and at least 50 (60 for some newer and hybrid-plan members) may instead have the Commonwealth buy added age or service credit, and an eligible employee may instead take immediate retirement (Va. Code 2.2-3204).

How it is paid

The benefit is paid "in the same manner as normal salary." Payments stop if the person is reemployed by any Commonwealth agency, or hired by one as a contractor, while still receiving them (Va. Code 2.2-3203(E)).

The benefit interacts with unemployment. The employee keeps the right to unemployment benefits, but the transitional severance benefit is reduced by the unemployment compensation received, and that offset is paid back as a lump sum with the last severance payment (Va. Code 2.2-3203(C)).

Virginia's 2026 non-compete rule tied to severance

A new subsection of Virginia's non-compete statute took effect July 1, 2026. It reads:

"No covenant not to compete between an employer and an employee is enforceable if such employer discharges such employee from employment without providing severance benefits or other monetary payment to such employee, unless such employer discharges such employee for cause." (Va. Code 40.1-28.7:8(C))

Under the new provision, the severance or other payment must also be disclosed when the covenant is signed. The Commissioner of Labor and Industry may impose a civil penalty of $10,000 for each violation of subsections B or C (Va. Code 40.1-28.7:8(E)). An employee may also sue a former employer that tries to enforce a covenant in violation of the section, within two years of the latest of the signing date, the date the employee learns of the covenant, the end of employment or any step the employer takes to enforce it, and a court may void the covenant and award damages, attorney fees and costs (Va. Code 40.1-28.7:8(D), (F)).

The change came from SB 170 (2026 Regular Session, incorporating SB 569), which passed the Senate 40-0 and the House 87-12 and was approved by the Governor on April 13, 2026 as 2026 Acts chapter 883.

Four points about its reach:

• It applies only to newer agreements. The act states that it does not "invalidate, alter, or otherwise affect any contract, covenant, or agreement entered into, amended, or renewed prior to July 1, 2026" (2026 Acts ch. 883, cl. 2). A non-compete signed before that date, and not later amended or renewed, is not covered by subsection C.
• It is not a severance mandate. An employer can still let an employee go without severance. The consequence is that a non-compete with that employee cannot be enforced, unless the discharge was for cause.
• It is written around a discharge. The text addresses an employer that "discharges" an employee.
• Its wording is not limited to low-wage workers. Subsection C refers to "an employee," while the separate ban in subsection B covers low-wage employees and, under 2026 Acts ch. 1113, health care professionals (for agreements entered into or renewed on or after July 1, 2026). We found no court decision or agency guidance yet on how far subsection C reaches.

For the separate law on trade secrets, see our Virginia trade secret laws page.

Severance your employer promised

Outside state employment, Virginia severance is a matter of contract, policy or plan. Two questions follow: is it enforceable as wages, and when is it due.

Is promised severance "wages" in Virginia?

That question is open. Virginia's wage statute says "'Wages' includes any remuneration an employer owes to an employee," and lists hourly wages, minimum wages, piece rate wages, day rates, salaries, overtime wages, legally required prevailing wages, commissions, tips, bonuses, and damages for misclassification (Va. Code 40.1-29(A)). Severance is not on that list, and we found no court or agency source deciding whether promised severance counts.

That matters because the wage statute carries strong remedies. A wage claim can go to the Virginia Department of Labor and Industry, or to court in a private action for the unpaid wages, an equal amount in liquidated damages, 8% prejudgment interest and attorney's fees, with triple damages for a knowing failure to pay. A suit must be "commenced within three years after the cause of action accrued" (Va. Code 40.1-29(H), (K), (M)). Willful nonpayment can also be a crime (40.1-29(F)). Those remedies apply to severance only if a court treats it as wages.

If your severance comes from a formal company plan, federal law may control the claim instead. ERISA supersedes state laws that relate to covered employee benefit plans (29 U.S.C. 1144(a)).

When promised severance must be paid

Virginia's termination-pay rule covers wages for work already done: "Upon termination of employment an employee shall be paid all wages due him for work performed prior thereto," on or before the date the employee would have been paid had employment continued (Va. Code 40.1-29(B)). The rule says nothing specific about severance. For final-paycheck rules, see Virginia final paycheck laws.

Severance and Virginia unemployment benefits

Severance reduces Virginia unemployment benefits. Va. Code 60.2-229(A) includes "dismissal pay, severance pay" in the definition of wages for unemployment purposes and says:

"Severance pay shall be deducted from any benefits payable after the Commission's receipt of notification of severance pay by the employer" (Va. Code 60.2-229)

Severance paid at or after separation is allocated to the last day of work, unless the employer allocates it otherwise. If the employer does allocate it, the allocation must be at a rate not less than the employee's average weekly wage in the last calendar quarter. For benefit amounts and how to file, see Virginia unemployment benefits.

What a Virginia severance agreement can and cannot include

Virginia has no general statute regulating separation agreements, but three provisions limit specific terms.

• Sexual assault and harassment. An employer may not require an employee or applicant, as a condition of employment, to sign or renew a nondisclosure or confidentiality provision, including a non-disparagement clause, that has the purpose or effect of concealing details of a sexual assault or sexual harassment claim. Such a provision "is against public policy and is void and unenforceable" (Va. Code 40.1-28.01). The statute is framed around conditions of employment and does not say whether it reaches a voluntary separation agreement.
• Forfeiting earned wages. No employer may require an employee, other than executive personnel, to sign an agreement forfeiting wages for time worked as a condition of employment or continued employment (Va. Code 40.1-29(E)).
• Unemployment benefits. A release in a severance agreement cannot take away your right to unemployment benefits. Under Va. Code 60.2-107, apart from a child support intercept agreement under 60.2-608, an agreement by an individual "to waive, release or commute his rights to benefits or any other rights under this title shall be void," and no employer shall "require or accept any waiver of any right under this title by any individual in his employ."

We found no Virginia statute or court decision on whether a severance agreement can release a claim for unpaid wages, and no Virginia statute setting a review period for a separation agreement.

Non-compete terms in a severance agreement

If a separation agreement adds or keeps a non-compete, the rule described above applies only to a covenant entered into, amended or renewed on or after July 1, 2026: such a non-compete is unenforceable when the employer discharges the employee without severance or other monetary payment, unless for cause (Va. Code 40.1-28.7:8(C)). A covenant made before that date and not later amended or renewed is not affected by the 2026 act (2026 Acts ch. 883, cl. 2).

Federal limits that also apply

These federal rules apply in Virginia; our severance pay laws guide explains each:

• Workers 40 and older. A release of federal age-discrimination claims must give you at least 21 days to consider it (45 days in a group layoff) and 7 days to revoke it after signing (29 U.S.C. 626(f)).
• Sexual harassment and assault. Under the Speak Out Act, a nondisclosure or non-disparagement clause agreed to before such a dispute arises cannot be enforced in court when the conduct is alleged to violate federal, tribal or state law (42 U.S.C. 19403).
• Labor-law rights. The NLRB's McLaren Macomb decision, 372 NLRB No. 58 (2023), bars severance agreements that require employees to broadly give up their National Labor Relations Act rights. The NLRB's General Counsel is arguing to overrule it in Valley Radiology, P.A. (10-CA-324512), an open case, so the decision remains Board law until the Board acts.

Layoff notice in Virginia

We found no Virginia law requiring a private employer to give its employees notice before a plant closing or mass layoff, so the federal WARN Act is the employee-notice rule in Virginia. A narrow statute requires owners of carbon-emitting power plants of 80 megawatts or more to notify local governments and state agencies, including the Virginia Employment Commission, of a planned closure (Va. Code 45.2-1701.1). The federal WARN Act applies in Virginia: it requires 60 days' written notice from employers with 100 or more employees, not counting part-time workers, or 100 or more employees who together work at least 4,000 hours a week, not counting overtime, before a covered plant closing or mass layoff (29 U.S.C. 2101-2102). Our severance pay laws guide explains the federal thresholds and back-pay remedy.

Reading a severance offer in Virginia

If you signed, amended or renewed a non-compete on or after July 1, 2026 and are being let go without cause, the 2026 rule makes the severance question directly relevant to whether that covenant can be enforced. A non-compete from before that date is not affected by the 2026 act. If you will claim unemployment, expect the severance to be deducted from your benefits under 60.2-229. Keep the offer letter, handbook or plan the severance comes from. Our severance pay laws guide covers reading and negotiating an offer in general.

Recent changes

We found no other 2026 bill on severance mandates, layoff notice or separation-agreement limits, but that search used web search rather than the Legislature's full-text bill search. We have not reviewed bills prefiled for the 2027 session.

Related

• Severance pay laws by state
• Virginia unemployment benefits
• Virginia final paycheck laws
• Virginia at-will employment laws
• Virginia trade secret laws

Disclaimer: This article provides general legal information about Virginia severance pay law (the Workforce Transition Act, Va. Code 2.2-3200 to 2.2-3204; Va. Code 40.1-28.7:8, 40.1-28.01 and 40.1-29; and the unemployment rule in Va. Code 60.2-229) and the federal laws that apply in Virginia. It is not legal advice. The information was verified on October 8, 2026. For advice about your situation, contact the Virginia Department of Labor and Industry, a legal aid office or a lawyer licensed in Virginia.

Last updated: October 8, 2026.

Frequently Asked Questions

Is severance pay required by law in Virginia?

We found no Virginia law requiring private employers to pay severance; it is owed only if the employer promised it. Eligible full-time state employees are the exception, with a statutory benefit under the Workforce Transition Act (Va. Code 2.2-3200 to 2.2-3204).

How much severance do Virginia state employees get?

Under Va. Code 2.2-3203, 4 weeks of salary for 2 or fewer years of service, rising with service to 2 weeks per year for 15 or more years, capped at 36 weeks, plus 12 months of continued state health and group life coverage with the agency paying its share.

Does Virginia's 2026 non-compete law require severance?

No. For a non-compete entered into, amended or renewed on or after July 1, 2026, Va. Code 40.1-28.7:8(C) makes it unenforceable if the employer discharges the employee without severance benefits or other monetary payment, unless for cause. The act does not affect agreements made, amended or renewed before July 1, 2026. It conditions the non-compete; it does not require the employer to pay severance.

Does severance reduce unemployment benefits in Virginia?

Yes. Va. Code 60.2-229 treats severance pay as wages and says it shall be deducted from benefits payable after the Virginia Employment Commission receives the employer's notice of it. Severance paid at separation is allocated to the last day of work unless the employer allocates it otherwise.

Is severance considered wages in Virginia?

It is unresolved. Va. Code 40.1-29(A) defines wages as any remuneration an employer owes an employee and lists examples, but it does not name severance, and we found no court or agency source on the question.

Does Virginia require notice before a mass layoff?

We found no Virginia law requiring employers to give employees notice before a mass layoff. The federal WARN Act requires 60 days' notice from employers with 100 or more employees not counting part-time workers, or 100 or more employees who together work at least 4,000 hours a week, not counting overtime (29 U.S.C. 2101-2102).

How long do I have to review a severance agreement in Virginia?

We found no Virginia statute setting a review period. If you are 40 or older, federal law requires at least 21 days to consider a release of age claims (45 days in a group layoff) and 7 days to revoke it after signing (29 U.S.C. 626(f)).