What is a Severance Package?

Answer:
A severance package is a package of benefits

which certain employees receive when they leave their jobs. Severance packages may be offered to employees who are laid off or who retire. Companies may also use severance packages as a way to encourage highly paid employees to take early retirement in order to lower company costs.

Also known as “golden parachutes” or “golden handshakes,” severance packages may include health insurance , stock options , life insurance , retirement benefits, pay for unused time off, and compensation pay. If a company is going out of business, its employees should not expect severance packages, even if they were originally promised.