Severance Pay

Search Dictionary

Definition of 'Severance Pay'

Severance pay is a lump sum payment made to an employee when they are terminated from their job. The amount of severance pay is typically based on the employee's salary and length of service. Severance pay is intended to help the employee cover expenses during the transition to a new job.

There are a few different types of severance pay:

* **Voluntary severance pay:** This is when an employee voluntarily leaves their job and the employer agrees to pay them a severance package.
* **Involuntary severance pay:** This is when an employee is laid off or fired from their job and the employer is required to pay them a severance package.
* **Redundancy severance pay:** This is when an employee is laid off because their job is no longer needed.

The amount of severance pay that an employee is entitled to depends on the state in which they live. In some states, there are no laws that require employers to pay severance pay. In other states, employers are required to pay a minimum amount of severance pay, or to pay severance pay based on the employee's salary and length of service.

Severance pay is a valuable benefit for employees, as it can help them cover expenses during a difficult time. However, it is important to note that severance pay is not a guaranteed benefit. Employers are not required to offer severance pay, and they can choose to offer a different type of severance package, such as a lump sum payment or continued health insurance coverage.

If you are an employee who is being laid off or fired, it is important to understand your rights under the law. You may be entitled to severance pay, and you should speak to an employment law attorney to learn more about your rights.

Do you have a trading or investing definition for our dictionary? Click the Create Definition link to add your own definition. You will earn 150 bonus reputation points for each definition that is accepted.

Is this definition wrong? Let us know by posting to the forum and we will correct it.