What is a “severance package”?

A severance package is a combination of money and benefits that an employer pays to a separated employee. A severance agreement is very similar to a separation agreement, but the amount of severance pay and benefits is usually determined by a specific employment contract, severance policy, or severance plan. A severance package often contains several different components, such as a base severance pay amount, payment of accrued bonuses and incentive compensation, other compensation and benefits, and expense reimbursement.