severance pay

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Money to which an employee is entitled at common law upon the termination of his contract of employment; for example, pay in lieu of notice, when he is dismissed with inadequate notice or none. An employee dismissed before the expiry of a fixed-term contract that has no provision for notice can claim damages in the courts to compensate him for the loss of pay he would have earned during the rest of the term, unless he was dismissed for a breach of contract entitling the employer to dismiss him. See also redundancy payment; unfair dismissal; wrongful dismissal.

Subjects: Law.

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