HR and Employment Law Topics
Severance Pay
National Summary
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 onetime 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., 1 week
of severance pay given for every year employed with the company).
Summary for [Your State]
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