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

The bill also would require that employers give six months of severance pay to workers whose jobs are lost to automation. — Jeremy Pelzer, cleveland.com, "Ohio’s execution method is constitutional, appeals court rules: Capitol Letter," 12 Sep. 2019 Los Angeles Times A Merced school superintendent resigned after a harassment probe but left with a year’s salary in severance pay. — Los Angeles Times, "Newsletter: L.A.’s top homelessness agency failed to meet most of its goals, a new audit says," 29 Aug. 2019 Carl Liebert, who left AutoNation after four months as CEO, is receiving $3.75 million in severance pay, according to a company filing with the Securities and Exchange Commission. — Marcia Heroux Pounds, sun-sentinel.com, "Former AutoNation CEO Carl Liebert to receive $3.75 million severance," 26 Aug. 2019 Last year, for example, Toys R Us workers, through a brave and innovative campaign, won $20 million in severance pay from the company’s PE owners. — Leo Hindery Jr., Fortune, "I’m a Private Equity Investor. Here’s Why We Need to Rein in Private Equity," 22 July 2019 In June, the council reduced his severance pay to nine months in the event Orozco was terminated. — Lex Talamo, The Seattle Times, "‘Out of office for good,’ AG Bob Ferguson says of Wapato administrator who resigned under pressure," 20 July 2019 For instance, agreements can help ensure that workers who lose their jobs get severance pay. — Bloomberg News, The Mercury News, "Buzzfeed workers walk out to force union recognition," 17 June 2019 At Vox Media, home of websites like the Verge and Eater, a new union contract ensures that employees get a minimum of 11 weeks of severance pay if they get laid off. — Gerry Smith, BostonGlobe.com, "Journalism jobs cut at highest rate since 2009," 1 July 2019 The severance pay was double Calhoun’s annual salary. — Chicago Tribune Staff, chicagotribune.com, "13 costly personnel changes at Illinois public colleges," 1 July 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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20 Sep 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