When should you pay severance?

passing check


Is it wrong for employees to expect two weeks severance? It is a two-way street and if employees see management terminating employees and not offering a severance package of some sort, management has defined the rules regarding notice. 

– Bryan Potts, President, TheCFO2go, San Antonio, TX


This question arose after a previous question about how to handle employees who leave without giving proper notice or who spend a lot of time hinting that they intend to give notice.

If an employee is under contract or is a manager, you may be contractually obligated to offer some sort of severance based on your agreement. Some restaurants also put a separation agreement into place that offers a severance in exchange for a terminated employee not suing or disparaging the employer and/or for general good will and community relations.

Otherwise, there is no official requirement that you offer severance. Terminating for cause and having good documentation makes not offering severance an easier decision.

Regulations vary and as always, check with your restaurant association and counsel. It’s a good practice to always check with your attorney before terminating an employee just to make sure there’s no possible recourse that you’re overlooking.

More on severance here

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