When Workers Leave FAQ
Am I legally required to pay severance to workers when they leave?
3. Am I legally required to pay severance to workers when they leave?
Probably not. Unless you lead your employees to believe that they are entitled to severance (through language in an employment contract, employee handbook, or oral promise, or by routinely paying severance to departing employees), you are probably under no obligation to do so.
However, many employers customarily offer severance pay to all long-term employees. A severance package helps ease the burden of being fired and may help the employee transition to a new job. A severance package may also help soothe the bad feelings of a fired employee. Not only will this ease your conscience when you have to fire employees, it will also make lawsuits from former employees less likely. After all, a former employee who has been rewarded for prior service to the company may not be particularly motivated to sue.
For ideas on whether to offer a severance package and what to include if you do, see Nolo's article Should You Offer Severance Pay?