HR Glossary
Severance pay

Severance pay

Updated on:
August 22, 2022


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What is Severance pay?

Severance pay is the additional pay that an employee receives when they leave a job. Severance pay ends when the user’s employment ends automatically, such as the layoff of workers, or physical separation.

This type of pay is separate from any benefits the employer offers, Severance pay is typically calculated by calculating a regular salary based on the number of hours worked and the number of days worked.

Severance pay is money that is paid to an employee when they are let go from a company. It is meant to help them transition into a new job and cover any expenses they may have.

Why does the severance pay be important?

It is a way for the company to show that they appreciate the employee's work. it helps the employee financially while they are looking for a new job, it gives the employee some time to transition into a new job without having to worry about money.