Taking Action

Get Answers Start Your Divorce Stop Your Divorce Divorce Forms Online Support DivorceDesk

Divorce Tools

Online Divorce Online Negotiation Custody Tracker QDRO Preparation SEE ALL

Info Categories

Contemplating Divorce Children & Divorce Divorce, Dollars & Debt Divorce Laws Divorce Process Divorce Negotiation SEE ALL

State Resources

California Florida Illinois New York Texas SEE ALL

More Information

Articles Checklists Research Center Cases of Interest Dictionary Encyclopedia Encyclopedia (pop-up) Blogs

For Professionals

Generate Clients Free Network Page Submit Articles Case Management Sign In

The Divorce Encyclopedia
Severance Pay

Term Definition Severance Pay - compensation paid an employee, often when he or she is involuntarily terminated by an employer.
Application in Divorce In the past generation, millions of American workers have squeezed out the workforce early as a result of the continuing restructuring of the economy. Many longtime employees retire voluntarily (but not genuinely by their own choice), or they retire involuntarily. When this happens, employees are often awarded severance pay based upon the number of years of service. For example, a furloughed worker may be given one week’s pay for every year of service.

Sometimes, severance pay is called separation pay, and it is part of what is called a "buyout" package, by which employers divest themselves of older workers without exposing themselves to allegations of age discrimination. In this routine, the older worker voluntarily departs, having waived any rights to charge age discrimination. In the case of reductions in force ("layoffs," as they are called,) sometimes the severance pay is sweetened by employer’s promise not to contest unemployment benefits.

As it applies to divorce, retirements under these circumstances may obscure an easy distinction between types of severance pay and early involuntary retirement benefits, particularly when a person retires early after a divorce. Sometimes early retirement benefits can be seen as compensation to an employee for a specific service, that is, retiring early. Courts face the challenge of deciding what portion of these benefits are separation pay (and separate property) and what portion are retirement benefits earned during a marriage (and marital property).

See Retirement.

See also Defined Benefit Plan, Defined Contribution Plan, Qualified and Nonqualified Plan, Pension Plan; ERISA; PBGC.

Add the Divorce Encyclopedia
to Your Website

The Research Center

Give Our Research Center a Try. Gain access to the same research material that lawyers often use to establish and win divorce cases. This material consists of legal journal articles and case explanation/analysis documents on a wide range of topics. If you think your situation is unique, your answers will most likely be here. In order to gain access to this area, you must establish an account, but you can search the documents before deciding.

The Divorce Source Difference

Since February 1st, 1997 (when we initially launched Divorcesource.com) we have helped millions of people contemplating or experiencing divorce. The reason we have been able to reach so many people is because we have made it a priority to listen to our customers. We have built a trust by listening and delivering what the customer needs, rather than what we think they want. This is the Divorce Source difference.

Easily Connect With a Lawyer or Mediator
Have Divorce Professionals from Your Area Contact You!
Enter Your Zip Code:

Custody Scheduling and Tracking

Easily Connect With a Lawyer or Mediator
Have Divorce Professionals from Your Area Contact You!
Enter Your Zip Code:


Start Your Divorce File for Divorce


Settle Your Divorce Negotiate Your Divorce


Track Child Custody Track Custody & Visitation

Guarantee Official PayPal Seal Facebook Twitter Versign Secure Site