Practical Law Glossary Item 8-503-1097 (Approx. 4 pages)
Glossary
Severance
In the employment context, the employer's payment of money or other benefits given to an employee when the employment relationship terminates. It is typically offered in exchange for the employee waiving certain rights, such as the right to bring certain claims against the employer. It can be negotiated either:
At the outset of employment and included in an employment agreement.
To learn about severance payments provided by way of an employee benefit plan, including the potential application of the Employee Retirement Income Security Act of 1974 (ERISA) and Internal Revenue Code Section 409A to different types of severance arrangements, see: