The information posted on PayrollTalk is for informational purposes only and is not intended to substitute for obtaining accounting, payroll, tax, or financial advice from a professional accountant.

Severance Pay

is an employer required to give severance pay to their employee?

Comments

  • rrupertrrupert ✭✭✭

    no not unless they have a written policy or contract that requires it.
    The WARN Act does require some possible notice/pay if enough people are laid off all at the same time, but you didn't give much to suggest that. In the end, the general answer is no.

    A few more details might be helpful.

  • Severance pay is money that an employer might want to provide for an employee who is leaving their employ. Normal circumstances that can warrant severance pay includes layoffs, job elimination and mutual agreement two part ways for whatever reason.Severance pay usually amounts to a week or two of pay for each year the employee supplied service to the company. For executives, the severance pay may even constitute up to a month’s pay for each year of service or whatever was negotiated in the senior employee's contract.

    No law requires an employer to pay severance pay. The Fair labor standards act requires that an employer pays an employee whose employment has been terminated their regular wages through their completion date and for any time that the employee has accrued. Time accrued would normally include accrued vacation time, but normally sick days. But, severance pay is totally up to the goodwill of the employer unless the employer is obligated to pay by an employment contract or by a severance policy stated in the employee handbook or elsewhere in writing.

  • Read the company policy on severance pay.

Sign In or Register to comment.