Severance Package

AAA

DEFINITION of 'Severance Package'

A bundle of pay and benefits offered to an employee upon being laid off from a company. The receipt of a severance package is contingent upon signing a severance agreement. The amount of money received is usually based on the length of employment prior to termination, and may include payment for unused vacation and sick days, and unreimbursed business expenses. Other continued benefits that may be offered or negotiated include life insurance, disability insurance and the use of company property, such as a laptop, cell phone, personal digital assistant (PDA) or vehicle. Companies may also offer outplacement assistance, to help the former employee find a new job.

INVESTOPEDIA EXPLAINS 'Severance Package'

Your employee handbook should include information on your company's severance package policy. Keep in mind, however, that the handbook may be out of date, and that severance packages are negotiable. Companies are not required to offer a severance package, and in fact may not be able to offer one if they are letting employees go because they are in major financial trouble.

Accepting a severance package may make you ineligible to file a wrongful termination suit or collect unemployment insurance. As well, the severance agreement may include a noncompete clause, which could interfere with your ability to find a new job. Before accepting any severance package, read the severance agreement carefully and consult a lawyer if necessary.

RELATED TERMS
  1. Wrongful Termination Claim

    A claim filed in a court of law by someone who believes they ...
  2. Worker Adjustment And Retraining ...

    A United States labor law that offers protection to workers, ...
  3. Cover Letter

    A written document submitted with a job application explaining ...
  4. Unemployment Claim

    A request made by an individual to the state government to receive ...
  5. Notice Of Termination

    Generally refers to the notice provided by an employer stating ...
  6. Cost Cutting

    Measures implemented by a company to reduce its expenses and ...
Related Articles
  1. The Layoff Payoff: A Severance Package
    Personal Finance

    The Layoff Payoff: A Severance Package

  2. Layoff Protection Plans: Good Deal Or ...
    Budgeting

    Layoff Protection Plans: Good Deal Or ...

  3. Choosing The Best Disability Insurance ...
    Options & Futures

    Choosing The Best Disability Insurance ...

  4. Losing Your Job: From A To Z
    Options & Futures

    Losing Your Job: From A To Z

comments powered by Disqus
Hot Definitions
  1. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  5. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer ...
  6. Floating Exchange Rate

    A country's exchange rate regime where its currency is set by the foreign-exchange market through supply and demand for that ...
Trading Center