Whether or not an employer is legally obligated to supply compensation to workers upon termination of employment varies considerably throughout the US. This sort of fee, past wages already earned, is just not mandated by federal regulation and is usually a matter of firm coverage or particular person employment contracts. For example, a enterprise would possibly supply further weeks of wage as a part of a separation settlement.
The apply can serve a number of necessary functions. It may possibly ease the monetary transition for displaced employees, help in sustaining optimistic employer-employee relations, and probably scale back the chance of authorized disputes arising from terminations. Traditionally, such preparations have been extra frequent in industries with robust union illustration or in conditions involving mass layoffs. These issues replicate a rising consciousness of the financial impacts of job loss.