Severance

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Related to Severance Payments: Severance package

Severance

A settlement received after being released from a corporation. In the context of corporate governance, an agreement that assures high-level executives of their postions or some compensation and are not contingent upon a change in control.

Severance

A payment often (but not always) made in a lump sum that occurs when an employee is laid off or fired. Severance is sometime voluntary; that is, an employee may choose to quit and take a severance that is offered instead of staying and risking a layoff with no severance. The amount of severance is determined by the employee's length of time at the company, previous pay rate, and other factors. Accepting a severance makes one ineligible to collect unemployment insurance or to initiate a wrongful termination lawsuit. A severance exists in order to reduce the risk of the company when layoffs become necessary and to improve employee morale.
References in periodicals archive ?
3402 specifically extends the income tax withholding requirements to several items, including severance payments that qualify as supplemental unemployment benefits (SUBs), which "shall be treated as if it were a payment of wages by an employer to an employee for a payroll period.
SUB-Pay Plans are paid on a periodic basis, which provides the former employee with steady income during their transition to reemployment, and may reduce the additional tax burden associated with lump-sum severance payments
US Airways Group Inc is being sued by a shareholder, Steven Rosenberg, over a severance payment deal for the company's top three executives.
This year's leading candidate is Jill Barad of Mattel, who resigned as CEO earlier this year following a series of performance disappointments and received severance payments valued at almost $50 million.
TEI believes that severance payments related to services previously rendered (e.
Liddy foregoing any severance payments, there will be restrictions on severance payments to members of this management group, which exceed TARP severance restrictions.
Severance Payments Subject to FICA Withholding The Supreme Court, reversing a decision of the Sixth Circuit, held that severance payments to terminated employees are subject to FICA withholding.
The National Audit Office (NAO) examined a further 90 severance payments made to corporation bosses after its initial study of 60 cases showed some staff were paid more than they were entitled to.
Earlier enraged Fianna Fail chief Micheal Martin accused Fine Gael of hypocrisy for campaigning on severance payments and pensions, while their boss took pension entitlements for 13 years while he was a TD.
A bankrupt company's ability to offer incentive compensation, retention bonuses and severance payments for executives is severely restricted.
The government also agreed to an enhanced severance fund of $25 million for severance payments to health workers who currently have lay-off notices "and for those who may receive layoff notices between May 1, 2004 and March 31, 2006.
For years the IRS has insisted companies collect and pay Social Security, Medicare and unemployment taxes on all severance payments they made to former employees after a layoff or termination.