Severance benefits are payments
made to employees upon termination of employment caused by events that are
beyond their control, such as workforce reductions, plant closings, company
takeovers, and mergers. Severance benefits are sometimes offered to encourage
early retirement or voluntary resignation, or to discourage terminated employees
from suing an employer. Severance benefits are not required by federal law
and are required only by a handful of states. However, most companies offer
severance pay. The payments themselves may be a one-time occurrence or spread
over a period of time. These benefits are usually calculated by the employee's
length of service with the company (e.g., one week of severance pay given
for every year employed with the company).
BLR does not provide Hawaii analysis for Severance Pay. This may be because there is no applicable state law for private employers or because the state follows federal law in this area.