severance pay

Definition of severance pay

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

Examples of severance pay in a Sentence

Recent Examples on the Web That includes possible opportunities for qualified candidates to fill open positions at the Fulton facility, benefits continuation and severance pay. — Justin L. Mack, Indianapolis Star, "Century-old Diamond Chain plant to close in downtown Indianapolis," 4 Feb. 2020 After factoring in the severance pay for Mr Pochettino, the annual bill for employing Mr Mourinho is about £19m. — The Economist, "Data suggest José Mourinho is as likely to flop at Spurs as to succeed," 23 Nov. 2019 Lee said that the affected staff will be informed as soon as possible and will receive some form of severance pay or other compensation. — Laura He, CNN, "Hong Kong protests and economic woes are pushing the city's major broadcaster to cut staff," 17 Dec. 2019 The former employee The Chronicle spoke to said they are being given one month of severance pay. — Mallory Moench, SFChronicle.com, "'Quite a shock': Scoot employees laid off by Bird in SF scooter shake-up," 6 Dec. 2019 Full-timers could expect severance pay, the employee said. — Danielle Paquette, Washington Post, "The ‘Amazon of Africa’ shutters in Cameroon — just before Black Friday," 20 Nov. 2019 Other Purdue Pharma attorneys noted during the hearing that none of the money still owed to Sackler employees -- like sign-on bonuses and severance pay -- would go to any member of the Sackler family. — Brian Vitagliano, CNN, "Purdue Pharma began cutting its opioid sales force last year, attorney says in bankruptcy hearing," 18 Sep. 2019 Briskman later sued her former employer and won severance pay that was initially withheld, according to the Washington Post. — Jason Silverstein, CBS News, "Woman who was fired for flipping off Trump wins election in Virginia," 7 Nov. 2019 These included cutting severance pay for permanent staff in order to make temporary contracts less attractive to bosses, and allowing firms in dire straits to depart from wage bargains. — The Economist, "Employment in southern Europe: better, but fragile," 22 Aug. 2019

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.

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Last Updated

8 Feb 2020

Cite this Entry

“Severance pay.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/severance%20pay. Accessed 20 Feb. 2020.

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More Definitions for severance pay

severance pay

noun

Financial Definition of severance pay

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.

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