What Is Severance Pay?

Posted 1 year ago  | 
Employment,General Legal,Labour & Service
Employment General Legal Labour & Service

1 Answer(s)

Deepika Gill
Advocate

Severance pay is the amount paid to an employee on early termination of a contract. In accordance with the Payment of Gratuity Act 1972, a worker is entitled to a gratuity payment upon termination of his service after five years of continuous employment. Amount of severance pay is equal to 15 days' wages for each completed year of service. Under the Industrial Disputes Act, retrenched workers are entitled to 15 days' wages for each completed year of service.