Wednesday, 5 November, 2008

Severance Pay ,

Severance pay is paid for terminating employment .
This can be layoff , job elimination ,restructuring or mutual agreement. If employee agreement do not stipulate any serverance pay , there is no obligation on employer to pay.

But normally employer get rid of any future claims, litigation through signed release along-with Severance Pay.

Severance pay is a positive and good thing from employer ,when job is lost through uncontrolled external circumstances. ( For example current financial turmoil ).

Japan still have the mind-set of life-time employment (Though changing) and hence in most of cases employer pays for loss of employment.In general holiday and other monetary benefits ( other than Bonus ) are also compensated.

Normally bonus is paid - if you are working till the pay-date. Off-course if retrenchment happened unfairly just before bonus , you can complain to labor office. And in good circumstances labor office may negotiate this to fair-portion.

Japanese firms like to keep low profile in such circumstances and in general for employees with two years with firm 3 months of salary plus unused holidays are paid. For more experienced employees up to 5 months plus unused holidays is the norm.

Senior employees and Managers need to negotiate . In a recent financial melt-down there are examples of 18 to 24 months of severance pays tied with signed release.

So there is surely more to watch while leaving too.

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