What is Severance Pay?

Definition

A severance package is a financial compensation package given to an employee upon their layoff from a company. It can include both monetary and non-monetary benefits. The purpose of this package is to provide employees with a financial cushion during their transition to a new job.

Key Features

• Typically offered to employees who are laid off due to economic reasons or downsizing.
• Can include a range of benefits, such as a lump-sum payment, extended health insurance coverage, and job placement assistance.
• The amount and terms of severance packages vary depending on factors such as the employee's length of service, position, and company policies.
• Severance pay can help employees cover expenses during their job search and transition to a new career.