| money, exclusive of wages, back pay, etc., paid to an employee who has tenure and who is dismissed because of lack of work or other reasons beyond the employee's control. |
| severance pay n. A sum of money usually based on length of employment for which an employee is eligible upon termination. |
Severance Pay
Compensation that an employer gives to someone who is about to lose their job.
Investopedia Commentary
Severance pay is not always paid to employees. It depends on the situation in which the employee is losing their job and whether legislation requires severance to be paid.
Related Links
Putting Management Under The Microscope
Surveying The Employment Report
See also: Downsize, Employee Stock Options - ESO, Featherbedding, Golden Boot, Restructuring