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.

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 ?
The records show that 10 former employees received the severance packages.
Overall, the severances, eliminating un- filled jobs and yet-to-be-realized "operational efficiencies" are projected to save $1.
City executives approved the severance applications on June 12.
Large severances will be cited--and presented as the norm-- by those seeking larger changes in CEO compensation.
Clearly, it's time for the issue of severances to be re-examined before rules are thrust upon them through law or regulation.
The company also said it will offer a voluntary workforce reduction program that will include early retirement incentives for approximately 350 non-union employees age 54 and older and a voluntary severance plan for all non-union employees under age 54.
The voluntary severance incentives include two weeks' base pay for each year of continuous service and one month's subsidized medical/dental benefits and life insurance for each year of continuous service up to 18 months.

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