Expert Insights: Year-end goodbyes — how much do they cost?
As 2025 winds down, companies are tying up loose ends before starting the New Year. This might include saying “goodbye” to employees for one reason or another.
Someone recently asked me about compensating an employee who’s leaving. Specifically, the company is parting ways with a longtime employee and wanted to provide the person with an extra month of pay to help this employee out until a new job is secured.
Company leaders expressed concern that this might set a precedent, implying they’ll have to do this for everyone who leaves. They asked if they have the right to offer (or not offer) severance pay on a case-by-case basis.
The answer is, yes. Employers have the right to choose whether or not they want to offer severance pay to a departing employee. Severance pay is often given to employees upon termination and is usually based on length of employment.
There is no requirement under the federal Fair Labor Standards Act for employers to offer severance pay. It’s a matter of agreement between an employer and an employee.
Of course, all companies want to avoid making these kinds of decisions with any hint of illegal discrimination, like giving only male employees severance pay and not female employees and actions of that nature. But generally speaking, a company may choose to issue severance pay to whomever they want.
While goodbyes are often tough, giving employees a little boost when they leave, such as in the form of severance pay, helps make the transition smoother for everyone.
















































