severance pay

noun

|Updated on: 14 Jun 2018

Definition of severance pay

: an allowance usually based on length of service that is payable to an employee on termination of employment

Recent Examples of severance pay from the Web

Those affected will receive severance pay and aid such as financial counseling, the company said.

— deon roberts, charlotteobserver, "Mortgage company layoffs hit Charlotte," 31 May 2018
Included in the agreement is $85,000 in severance pay for Olson, as well as $15,000 for his attorney fees.

— anna bybee-schier, chicagotribune.com, "Triton student affairs VP gets $100K in severance, but can't work for school again unless invited: document," 16 May 2018
In an interview, Dranoff, who had stopped by 777 South Broad on Monday afternoon to personally apologize to Jackson, said that every employee, regardless of the offer status, got severance pay.

— juliana feliciano reyes, Philly.com, "Residents rally to get laid-off workers new jobs amid sale of Dranoff apartments," 3 May 2018
Workers will be given severance pay and the opportunity to apply for open positions at Sears or Kmart, also owned by Sears Holdings Corp., the company said.

— lauren zumbach and ese olumhense, latimes.com, "Sears to close last store in Chicago, the city that helped launch its growth into a major retail presence," 18 Apr. 2018
Puerto Ricans enjoy among the most generous protections of any American workers, including mandatory holidays and severance pay.

— The Economist, "America has let down its Puerto Rican citizens," 12 Apr. 2018
According to her lawsuit, Akima promised Briskman four weeks of severance pay but gave her only.

— carolyn mcatee cerbin, USA TODAY, "Juli Briskman, woman on bike who flipped off Trump motorcade, sues over job loss," 5 Apr. 2018
According to her suit, Briskman was promised four weeks of severance pay, but only received two.

— natasha bach, Fortune, "That Woman Who Flipped Off President Trump's Motorcade? She's Suing for Getting Fired.," 5 Apr. 2018
According to the Post, when Akima fired her, the company promised four weeks of severance pay but only gave her two.

— breanna edwards, The Root, "Woman Fired for Flipping the Bird at Trump Motorcade Sues Former Employer," 5 Apr. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'severance pay.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of severance pay

1943

in the meaning defined above

See Words from the same year

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Financial Definition of SEVERANCE PAY

severance pay

noun

What It Is

Severance pay refers to a payment from a company to an employee who is being discharged.

How It Works

Under certain circumstances, employers compensate an employee who is being discharged with a sum of money called severance pay. The specific amount may be related to the employee's salary and length of time with the company. In most cases, severance pay is paid to an employee who is being laid off due to internal changes within a company.

To illustrate, suppose Bob is one of two internal accountants for company XYZ. Due to restructuring, XYZ now needs only one accountant, and Bob's position is subsequently eliminated. Bob is laid off, as a result, and is given severance pay by XYZ when he leaves.

Why It Matters

In many cases, employees are made to leave a given company due to internal changes that eliminate their jobs. Severance pay is a compensatory measure that ensures that laid-off employees are compensated fairly not only for work done since their last pay cycle, but also for covering any expenses that may be incurred through no fault of their own between the time they leave their current job and find another position.

Source: Investing Answers