What is the difference from termination pay and severance pay?
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What is the difference from termination pay and severance pay?
Asked on November 9, 2011 under Employment Labor Law, Connecticut
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
There is not necessarily any difference--both terms are often used interchangeably. The key issue is how the employer in question is using them, and the best way to know that is to ask.
To the extent there is any difference in usage, "severance pay" is used almost exclusively for a payment made when someone's employment terminates which was either required by an employment contract, the consideration for signing a separation and release agreement, and/or pay the employer voluntarily chose to provide (e.g. to cushion the blow). It is not money for actual work done--it is not salary or wages.
"Termination pay" could be the above, but it could also simply be the last payment(s) made to the employee, for the last work he or she did.
But again, there really is not firm distinction; what matters is how the terms are used in any particular case.
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