A leadership group unexpectedly forced out Pastor Timothy after four years of successful ministry. Similarly, Pastor John was dismissed immediately following the discovery of embezzled funds. In another instance, after a decade of service, the board removed Pastor Ed, citing a misalignment between his leadership style and the congregation’s needs.
Whether these pastors should receive a severance package often depends on the specific circumstances surrounding their departure.
Severance pay is a standard practice across many industries, frequently offered as a gesture of goodwill to laid-off employees, though it is not mandated by the Fair Labor Standards Act. Typically, these packages are calculated based on tenure, with a common benchmark being one to two weeks of pay for every year of service. While these terms are ideally outlined in an employment contract, many ministry leaders lack such formal agreements. This absence can complicate pastor termination considerations throughout the year and intensify the challenges of pastoral pain management during the transition.
What about paying a pastor severance? Whether to pay a pastor a severance depends upon the scenario, ministry tenure, and church budget.
What is the scenario?
Retirement. A long-tenured pastor beginning retirement may receive a severance for a few months following an official departure date. In this scenario, the church desires to honor the faithfulness of their shepherd by making the transition out of a pastoral role a little easier. These severances are generally good but should be kept under a year.
Disqualification. When a pastor’s sins are to the degree of disqualification from ministry, the decision to pay a severance is a more difficult decision. Visceral reactions will land on both sides. Some will call for justice and want to cut off the pastor immediately. Others will desire to extend grace and help the family for a season.
Each case is different. While it’s difficult to give a general rule for disqualified pastors, I believe the best path is to offer a one-month to three-month severance. Have a posture of grace and generosity. Potential exceptions would be cases of abuse and embezzlement, in which termination is immediate with no severance.
Conflict. Some pastors are wrongly forced out due to circumstances entirely out of their control. Others create conflict and deserve to go. A severance is warranted in many cases of church conflict. For a shorter-tenured pastor, offer three months. For a longer-tenured pastor, offer six months. If a power group forces out the pastor, then give a year.
What is the pastor’s tenure?
Pastor Ed served his church without major incidents and minimal conflict. The church declined slightly over his ten-year tenure, and the board believed a leadership transition was in order. They asked Pastor Ed to step down. Most people liked him. At the same time, the church was not likely to split over his departure. In cases like this one, a general rule of thumb for severances is one month’s salary for every year served, up to a year. If a pastor served for nine years, then offer a nine-month severance. In Pastor Ed’s case, he should receive a severance for ten months. Severances beyond a year are not typically beneficial to the church or the pastors receiving them.
Also, about half of pastors in the United States are bi-vocational. Unfortunately, these pastors rarely get anything in the form of a severance and are often neglected when transitioning between pastoral positions.
What is the state of the church budget?
If compassion were currency, then many churches could afford to pay better severances. The reality is the budget will be a determining factor in the size of the payout. Some churches offer lump sums upfront. Frankly, I believe a better approach is to pay the severance on the normal pay cycle over a set period. The severance should include salary, benefits (health and retirement), and transition services like counseling.
Lastly, it’s important to note that church employees are generally not eligible for unemployment benefits since most churches do not pay the unemployment tax in their respective states. As you determine a severance, consider these three questions. What is the scenario? What is the pastor’s tenure? And what is the state of the church budget?
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This article originally appeared on ChuchAnswers.com and is reposted here by permission.