Definition

voluntary severance package

Part of the Business terms glossary:

A voluntary severance package is a financial incentive that’s offered to an employee in hopes that he will resign or retire. Unlike most severance packages,  a voluntary severance package gives the employee the option to decline the offer.

 

Generally, voluntary severance packages are offered at a time that will benefit the company by reducing the workforce and cost of salaries and benefits. Long-term employee who are close to retirement age and earn high salaries may be offered  early retirement packages, for example, in the hopes of forestalling layoffs.  Because a voluntary severance package benefits both the employer and the employee who accepts the package, it is sometimes referred to as a "golden handshake." 

 

This was last updated in July 2013
Contributor(s): Ivy Wigmore
Posted by: Margaret Rouse

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