Severance Pay
Severance pay is a financial compensation provided to employees who are terminated from their job, typically as a result of layoffs, company downsizing, or restructuring. It is meant to support employees as they transition out of the organization and search for new employment. Severance pay is often calculated based on factors such as the employee’s length of service, job position, and the terms of their employment contract or company policy. The amount and eligibility for severance pay can vary between companies and may be negotiated as part of an employee’s termination package. In some cases, severance pay is accompanied by other benefits, such as continued health insurance coverage for a period of time.
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