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What is a Severance Package?
When an employee leaves a job at a company against his/her choice, they may be eligible to receive a severance package, which includes compensation and perks.
When employees lose their job as a consequence of the company's decisions rather than because of bad performance that led to their termination, separation money is typically provided.

Severance Package – Example

A technology based corporation Company X is looking to establish a presence in the same country.
As a part of its expansion plan, buying a smaller firm Company Y which operates in the same industry is the decision taken by Company X.
Company X has more expertise and a much bigger team as compared to one of the divisions in Company Y.
Keeping this in mind, Company X is willing to let a majority of employees continue their services at Company Y; since they have more experience in the local market.
Company X determines that by totally replacing the a department at Company Y; with members of Company X's current team, both firms will benefit. This division of Company Y is deemed unnecessary by Company X.
As a result, Company Y in announces layoffs to its division which has 100 employees.
For each year they worked there, each of the 100 employees will receive severance money, which will be equal to one month's salary for every year of service.
An employee will therefore receive 10 months' worth of severance pay if they had worked for the Company Y for ten years.

Severance Package – Backlash faced by Retailer ‘Sears’

Companies that do not provide severance compensation run the risk of upsetting employees and damaging their reputations.
Sears revealed in 2018 that it would be terminating employees working on an hourly basis without providing them with severance pay.
In addition to this, they also announced that the executives will be paid millions as a part of annual bonuses while restructuring in the face of bankruptcy.
The company received harsh criticism from both employees and the broader public.

Severance Package – Meta

Severance pay was promised to terminated Meta employees, however, not all of them are receiving it.
According to reports, a number of recently terminated Meta workers are dissatisfied with the severance payments they received. They claim they were given less money than other employees.
Although Meta fired 11,000 workers, not all of them received the promised severance pay.
As per CNBC, The Meta Sourcer Development Program will “help workers from diverse backgrounds obtain careers in corporate technology recruiting.” The employees laid off were a part of this initiative.

In addition to the base severance compensation of 16 weeks that Meta provided to some of its employees, it also promised a salary of two added weeks in the account of the number of years they have served.

The multinational tech company added that it will cover the costs required for their health care. Employees and their families are eligible for this, which has a six months validity.
CNBC was told by the employees, that the company is providing only a three-month valid COBRA insurance and a base pay of 8 weeks as a severance package.
Despite being full-time employees as opposed to contract workers they further asserted that the IT company has not given any explanation on this issue.
According to some sources, some affected employees even sent their concerns to Mark Zuckerberg, CEO of Meta, and other officials in the form of a letter to let them know about the severance package issue and requested to help them with this issue.

Severance Package – Explained

Severance compensation typically consists of one to two weeks of salary for each year an employee worked for the firm.
Senior executives often receive severance compensation as specified in the contract of employment, and executives may earn a month's compensation for every year of service.

Components of a Severance Package

The pending monthly compensation of the employee. A surcharge is determined by the number of months of service.
A sum of money in replacement of the necessary notice time
Few companies continue to provide employees with dental, life, or health insurance without paying the bills.

United States and the Gamut of Severance Package

United States
Although there is no mention of severance pay being mandatory as per the U.S. Department of Labour, the company is compelled to abide by the policies if there is a mention in the employee’s contract to offer a severance package.

This video is on Severance Package and it has the following sub-topics.

Timestamps
0:15 - What is a Severance Package?
0:37 - Severance Package – Example
1:41 - Severance Package – Backlash faced by Retailer ‘Sears’
2:13 - Severance Package – Meta
3:46 - Severance Package – Explained
4:47 - Components of a Severance Package
5:14 - United States and the Gamut of Severance Package