Severance

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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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
"All severance payments are calculated in accordance with the council's approved organisational change policy, where employees are compensated for losing employment through redundancy, voluntary severance or other reasons."
with the 34 to Anne The Taxpayers' Alliance said Mr West was one of 26 senior local authority staff who were given severance payments of PS100k or more.
Infosys had decided to pay Rs 17.38 crore as severance payment to the then CFO Bansal in 2015.
The settlement gives the seven workers a higher severance payment in return for their agreement to leave the company.
This scheme gives staff the opportunity to leave their posts with a severance payment. "It is a completely voluntary scheme - and we have already received a number of requests from staff who are interested.
Severance payments are deductible by the employer if: (a) the payments are compensation for services previously rendered by the employee, and (b) the payments are reasonable in amount.
Byline: Dubai chamber says high severance payments could reduce productivity
One potential trap for executives with employment contracts relates to severance payments that are triggered by the executive's resignation for "good reason" as defined in the agreement.
Health Secretary Alan Johnson ordered that severance payments to Rose Gibb be withheld after she stepped down as head of Maidstone and Tunbridge Wells NHS Trust.
LAN Airlines posted a profit of $16.5 million in the second quarter after a one-time charge of $6.4 million related to severance payments, reduced 38% from $26.6 million in the second quarter of 2005.However, the airline group's operating performance was sound for a period that traditionally is the weakest in South America.
The "double trigger," the most common practice regarding severance payment in the event of a COC, requires that both a COC and the failure to provide a comparable job must occur before severance is payable.
Nothing angers shareholders (and employees) more than a large severance payment to a failed CEO.