Severance Package

Compensation and benefits provided to employees upon termination due to layoffs, downsizing, or organizational restructuring.

HR departments design severance packages to include financial payouts, extended health benefits, and outplacement services. Well-structured severance policies help maintain employer reputation and employee goodwill.

FAQ

What does it mean when you get a severance package?

A severance package means the company is offering you financial compensation and other benefits after your employment ends due to redundancy, layoffs, or a mutual agreement. It’s a way to ease your financial transition while you look for another opportunity.

How to calculate severance pay?

Severance pay is typically calculated based on your length of service and salary. A common formula might be:

  • One or two weeks’ pay for each year of service, or
  • A fixed number of months’ salary (depending on your employment agreement, country’s legislation, or company policy)
    Some companies may include additional payments, benefits, or assistance with health care.

Do you get severance if fired?

Usually, you do not get severance pay if you are fired for misconduct or poor performance. Severance is typically reserved for cases of redundancy, layoffs, or when employment is terminated through no fault of the employee. However, in some cases, companies may negotiate a severance package as part of a separation agreement — even if it's a termination — depending on the circumstances.

Strategic HR Management (SHRM)

An advanced HR approach that aligns human resources policies with long-term business objectives.
SHRM involves workforce planning, leadership development, and data-driven decision-making. HR professionals use SHRM to enhance company performance and gain a competitive advantage.

What are the 5 P's of strategic HRM?
  • Philosophy — the beliefs and values that guide how people are treated in the organization
  • Policies — the formal guidelines and routines related to employment, pay, benefits, and workplace behavior
  • Programs — initiatives or interventions implemented to align people with business goals
  • Practices — day-to-day routines and methods for managing human resources
  • Processes — the procedures and mechanisms that enable effective delivery of HR strategies

What is the role of HR in strategic management?

HR’s role in strategic management involves:

  • Aligning HR strategies with business goals
  • Attracting, retaining, and developing the right talent for future needs
  • Designing succession plans and leadership programs
  • Fostering a culture of high performance and adaptability
  • Providing data and insights to aid in decision-making
  • Ensuring compliance with employment laws and regulations while strengthening competitiveness

What are the aims of SHRM?

The aims of Strategic Human Resource Management (SHRM) are to:

  • Improve organizational performance and competitiveness
  • Develop a skilled, motivated, and adaptable workforce
  • Align human resources practices with business goals and strategy
  • Support cultural transformation and innovation
  • Enhance job satisfaction and loyalty among employees

Ensure equitable treatment and fairness in employment practices