Severance Pay

What is Severance Pay?

Severance pay is a financial compensation provided by an employer to an employee at the end of their employment. While it is not legally required unless specified in the employment contract or company policy, many organizations offer it as a goodwill gesture to ensure a smooth transition.

Severance packages often include benefits such as accrued vacation pay, extended health insurance, and outplacement support. Outplacement assistance helps departing employees with resume writing, job searching, career coaching, and access to office resources, making the transition to new employment easier.

Employers may provide severance pay to employees who are laid off due to downsizing, retiring, or, in some cases, resigning or being terminated. This support serves as a financial cushion for employees while also reinforcing a positive employer-employee relationship.

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