Severance
Definition
Compensation and benefits provided to employees following an involuntary termination.
What is Severance?
Severance packages may include final pay, continued health benefits, or other incentives provided in exchange for a release of claims. It’s often offered during layoffs or negotiated terminations and can provide closure and protection to both parties.
Why is Severance Important for Employers?
- Mitigates legal risk for claims like wrongful termination
- Demonstrates goodwill and employer brand integrity
- May be required by contract or collective bargaining agreements
FAQs
Is severance legally required?
Generally no, unless specified by contract, a collective bargaining agreement, or state WARN laws in certain layoff situations.
What should a severance agreement include?
Terms of pay, benefits continuation, release of claims, confidentiality clauses, and any applicable non-compete provisions.
Can severance be paid over time?
Yes. Employers may offer lump sums or installment payments, depending on internal policy and negotiation.
How ExtensisHR Can Help
We support compliant offboarding by:
- Crafting legally sound severance agreements
- Advising on fair and strategic compensation terms
- Coordinating benefits continuation and final pay logistics
- Guiding employers through risk-reducing documentation