What is a key difference between termination pay and severance pay?

The distinction that sets severance pay apart is that it is typically provided as a single lump sum payment to an employee who is leaving a company, often due to layoffs, workforce reduction, or other business-related decisions. This payment serves as financial support during the transition period as the individual seeks new employment opportunities.

In contrast, termination pay refers to wages owed to an employee upon their termination, which might include accrued vacation pay, unpaid wages, or other compensations related to the work already performed. Termination pay is not necessarily a lump sum intended for transition, but rather a settlement of what the employee has earned up to the point of termination.

Understanding this distinction is crucial for agents and players involved in contract negotiations and situations where contract termination occurs, as it can affect financial planning and expectations during the transition from one role to another.