severance pay

noun

1. money, exclusive of wages, back pay, etc., paid to an employee who has tenure and who is dismissed because of lack of work or other reasons beyond the employee's control.

severance pay

noun

1. compensation paid by an organization to an employee who leaves because, through no fault of his own, the job to which he was appointed ceases to exist, as during rationalization, and no comparable job is available to him

Word History and Origins

Origin of severance pay¹

First recorded in 1940–45