A payment made by a corporation to an employee who has been laid off. A typical severance package is 2 weeks of pay for each year a person has worked at the company, although severance packages vary substantially from company to company. Severance payments usually are voluntary payments and are not required by law. Some exceptions occur if a union contract guarantees a certain amount of severance or if other requirements are spelled out in a contract. Severance payments may be made in a lump sum or may be paid out in the regular payroll process.