Termination benefits are settlements owed to an employee who no longer works for an employer. The settlements that are due to a terminated employee vary depending on the reason for termination, job title, and status of the employee at termination, as well as the policy and procedures of the employer. The laws that govern the employer and the location of the organization can also play a factor in the termination benefits that are awarded.
The benefit eligibility for terminated employees depends a great deal on the reason for the termination, which can be either voluntary or involuntary. Voluntary termination benefits are employee benefits due to those employees who voluntarily terminate their employment. Most times, employees decide to end their employment in exchange for a specialized benefit package.
On the other hand, involuntary termination benefits are provided to those employees who do not have a choice in the matter of their employment. Usually, the employer will communicate the plan for termination to the employees in advance, but there is no negotiation possible for continued employment. Depending on the situation, the employees may or may not be eligible for termination benefits.
Termination benefits can be withheld from employees who do not follow the proper policies and procedures of the company for which they work. Others who voluntarily resign their position are eligible for certain benefits if they follow the guidelines set by the employer. Employees who are asked to leave their position or become a victim of downsizing or lay-offs may receive some or all of the benefits that were offered to them as an active employee.
Most termination benefits are not paid out indefinitely, but are time-limited and have a predetermined date when the benefits will end. Many of the requirements that define the eligibility of employee benefit packages also define the criteria for termination benefit packages. Employer benefit requirements depend on the size of the business and the number of employees, plus any legally mandated requirements regarding benefits for employees.
Employee benefits consist of a variety of features that are provided to employees that are actively working for an employer. Common benefits offered by employers often include health plans, retirement plans and stock options, to name a few. Termination benefits may consist of some or all of the benefits the employee had while employed. At termination, these may be paid out as monetary amounts over time, a lump sum payout or an extension of other benefits, such as a pension.