Pay · HR glossary

Severance Pay

Severance pay is compensation provided when employment ends under qualifying circumstances, law, contract or agreement. Its availability and calculation vary by jurisdiction and exit type.

Example

An employer ending roles reviews whether affected employees qualify for statutory or contractual severance and explains the components separately from unpaid wages.

What to keep in mind

Severance is not automatically due on every departure and is not the same as notice pay or final salary. Check eligibility and calculation rules rather than applying a generic months-of-pay formula.

Further reading

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