What term refers to a lump-sum payment made to an employee when their employment ends?

What term refers to a lump-sum payment made to an employee when their employment ends?

• A. Incentive
• B. Bonus
• C. Pension
• D. Severance

Answer: (D)

Severance refers to a lump-sum payment provided to an employee when their employment ends. It’s part of a severance package and is intended to help bridge the transition after termination, often offered in layoff or company-initiated separation and may come with additional benefits or an agreement to release claims. This payment is not tied to performance or future work, which is why it’s distinct from incentives or bonuses that reward ongoing contributions. A pension, by contrast, is a retirement benefit designed to provide ongoing income after leaving work, rather than a one-time termination payout.

Severance refers to a lump-sum payment provided to an employee when their employment ends. It’s part of a severance package and is intended to help bridge the transition after termination, often offered in layoff or company-initiated separation and may come with additional benefits or an agreement to release claims. This payment is not tied to performance or future work, which is why it’s distinct from incentives or bonuses that reward ongoing contributions. A pension, by contrast, is a retirement benefit designed to provide ongoing income after leaving work, rather than a one-time termination payout.