Severance package facts for kids
A severance package is a special payment and benefits that people sometimes get when they leave their job at a company. It's like a farewell gift from the company. This package is given in addition to their regular pay for the time they worked.
Severance packages can include different things:
- Extra money based on how long someone worked for the company.
- Payment for any unused vacation time or sick days they had saved up.
- Money instead of a notice period. Sometimes, companies need to tell employees they are leaving a certain amount of time in advance. If they don't, they might pay them for that time instead.
- Help with health, dental, or life insurance.
- Benefits from their retirement savings plans, like a 401(k).
- Stock options, which are a chance to buy shares of the company's stock later.
- Help finding a new job, such as access to job search services or assistance with writing a résumé (a document that lists your work experience and skills).
When Do People Get Severance?
Severance packages are most often given to employees who are laid off (meaning the company no longer needs their job) or who retire (stop working because they are old enough).
Sometimes, a company might offer a severance package even if someone decides to resign (quit their job) or if they are fired.
Companies often have rules about severance packages written in their employee handbook. In many countries, there are also government rules that control how severance packages are given out.
