What Is Severance Pay?

Severance pay-A one-time compensation paid to an employee when the employer terminates the employment relationship with the same employee.

Severance pay

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Severance pay-A one-time compensation paid to an employee when the employer terminates the employment relationship with the same employee.

significance

First, it is a humanitarian gesture and it is conducive to shaping good public relations. In addition, most managers expect employees to give them at least one month's notice when they plan to leave. Therefore, if an enterprise wants to dismiss an employee, it must provide workers with economic compensation in accordance with Article 47 of the Labor Contract Law of the People's Republic of China. That is, according to the number of years the employee has worked in the unit, the worker is paid at the standard of one month's wages every year. If it is more than six months and less than one year, it is calculated as one year; if it is less than six months, the employee shall be paid economic compensation for half a month's wages. ^[1]