severance pay

American  

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.

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severance pay British  

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

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Etymology

Origin of severance pay

First recorded in 1940–45

Example Sentences

Unionized workers at Diageo’s plant in Amherstburg in December ratified a closure agreement that provided enhanced severance pay.

From The Wall Street Journal • Feb. 13, 2026

The draft law reduces severance pay, allows payments in kind and restricts vacation usage, among other proposals that the General Confederation of Labor considers "regressive."

From Barron's • Feb. 11, 2026

Former workers posted on social media that they were given 10 weeks of severance pay.

From Los Angeles Times • Jun. 11, 2025

The email offered current federal employees the option of around eight months of severance pay, in exchange for an immediate resignation.

From Salon • Feb. 6, 2025

I searched for his severance pay on my desk, wondering who the devil had hired him in the first place.

From With a Vengeance by Woodley, J. B.