Definition of severance pay
: an allowance usually based on length of service that is payable to an employee on termination of employment
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Recent Examples of severance pay from the Web
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Puerto Ricans enjoy among the most generous protections of any American workers, including mandatory holidays and severance pay.
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According to her lawsuit, Akima promised Briskman four weeks of severance pay but gave her only.
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According to her suit, Briskman was promised four weeks of severance pay, but only received two.
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According to the Post, when Akima fired her, the company promised four weeks of severance pay but only gave her two.
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Workers will not receive any severance pay, the company said in a letter sent to employees.
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According to the Journal, complaints by another former employee, Jane Buchanan, over inappropriate language culminated in Buchanan leaving the company with severance pay and a non-disclosure agreement.
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Us workers receive severance pay and find new jobs.
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They'll be provided severance pay, Hunter said in his email.
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
Financial Definition of SEVERANCE PAY
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.
Source: Investing Answers
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