severance pay

noun

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

Anyone who’s likely to rely on lifelong series of transactions with the government in the form of benefits, pensions, severance pay, etc., ends up paying a higher penalty for not voting. — Chayenne Polimedio, Vox, "Is voting a civic right or a civic duty?," 6 Nov. 2018 The staff was let go without any notice or severance pay. — Juliana Feliciano Reyes, Philly.com, "Feminist Apparel CEO Alan Martofel called out for past behavior says: 'Is feminism an inclusive movement or not?'," 12 July 2018 Some workers say the company had promised severance pay, then reversed course. — Lillian Rizzo, WSJ, "Who Killed Toys ‘R’ Us? Hint: It Wasn’t Only Amazon," 23 Aug. 2018 After the toy chain went out of business for good, several executives got millions of dollars in bonuses while more than 30,000 employees were told they’d receive no severance pay. — Chavie Lieber, Vox, "After Sears declared bankruptcy, employees are fighting for severance pay," 3 Dec. 2018 The severance pay and bonuses don't affect the hundreds of part-time Bradley Center workers such as ticket takers and ushers. — James B. Nelson, Milwaukee Journal Sentinel, "Many long-time Bradley Center workers will not have jobs at the new Bucks arena," 11 May 2018 In recent months, those workers have been fighting for severance pay. — Lillian Rizzo, WSJ, "Toys ‘R’ Us Lenders Plan Brand’s Revival," 2 Oct. 2018 Lawyers for Cardinal and the state Department of Health and Human Services are trying to recover S3.8 million in severances paid to Topping and three other executives. — Jim Morrill, charlotteobserver, "Former CEO sues Cardinal Innovations for libel and slander | Charlotte Observer," 15 May 2018 The lawsuit alleges Modany steered ITT into financial peril as part of a focus on maximizing his severance pay and future career prospects. — James Briggs, Indianapolis Star, "Top ITT executives agree to fines, ban from top corporate jobs in SEC settlement," 9 July 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.

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Last Updated

18 Apr 2019

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The first known use of severance pay was in 1943

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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.

Source: Investing Answers