An article this week in Business Week (Now Severance Packages Are on the Chopping Block As the economy swoons, some companies are cutting workforces—and severance benefits) describes how companies looking to save costs in a difficult market are reducing severance packages for employees on their way out.
A lot of employees believe that companies provide severance pay to satisfy some sort of legal obligation. That is not true. Unless a guaranteed severance package is part of a verbal or written agreement between employees and the employer, there is no legal duty on the employer's part to provide severance pay to an employee who is terminated or who resigns.
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