Severance Pay Policy
Severance pay is extra compensation paid to employees as a result of their
involuntary termination. It is paid in addition to any wages owed to employees
for work performed and generally is not required by federal or state law.
(However, a few states, such as Maine, require the payment of severance in the
case of plant relocations or shutdowns. Employers should check applicable state
law.) (See also:
This policy discusses why employers pay severance, general releases, the legal
requirement to pay severance, severance and ERISA.
Topics in this policy include:
∑ Why Employers Pay Severance
∑ Management Discretion
∑ Refusal to Transfer
∑ Short-Term Layoffs
∑ Mergers and Acquisitions
∑ Use of a General Release
∑ Amount of Severance Pay
∑ Lump Sum vs. Periodic Payments
∑ Legal Requirement to Pay Severance
∑ Severance Pay Plans
∑ Entitlement to Severance Pay Under Contract Law
∑ Denial of Severance Pay as Age Discrimination
∑ Complete or Partial Sale of the Employer
∑ Requirement of a Release
∑ Severance Pay and Unemployment Compensation
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Our policies are intended to help organizations create their own personnel
policies or handbooks for distribution internally. Accordingly, you may use the
Model Policies verbatim or modify them to suit the culture of your organization.
Since the policy is copyrighted, we are making a special exception for this
particular use. However, the policies may not be used to create or update
policies for any organization other than the one buying the policy. In other
words, you canít create policies or handbooks to offer to other organizations,
either for profit or free of charge. This would be considered a direct violation
of our copyright.
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159 St. Matthews Avenue, Suite 5
Louisville, KY 40207