Definition, Meaning & Synonyms

severance pay

noun

/ˈsɛvərəns peɪ/

Definition

A payment made to an employee upon termination of employment, typically in the form of a lump sum.

Examples

If you lose your job, you may receive severance pay depending on the company’s policy.
After working for the company for 10 years, she was offered severance pay to help her transition.
The severance pay was a welcome cushion while he looked for new employment.

Meaning

Severance pay is compensation that an employer provides to an employee when they are laid off or let go, often based on the employee’s salary and length of service.