Severance or Retirement Pay is payable in case of involuntary termination, namely: dismissal, death, severe ill health or retirement.
Pre-funding for severance pay is not required by legislation except to the extent that may be prescribed in collective or individual work agreements. Does the company pre-fund for termination liabilities? And if so, then to what extent?
The amount of severance or retirement pay may be restricted by implementation of “clause 14” of the severance pay law 1963. The adoption of “clause 14” does not necessarily coincide with its application such that a company may establish a legal right to pay the lower amount but continue to pay the standard (higher) amount. Does the company implement “clause 14” of the severance pay law? And if so, then is it applied in practice?
The amount of severance or retirement pay may be constrained by implementation of “unconditional rights” in order to reduce the supplementary amount required for payment by the company in case of involuntary termination. This option may reduce the company payment related to the shortfall between the accrued severance pay fund and the standard calculation based on final salary and service. does the company implement “unconditional rights”?
Although not required by legislation, or contract, many employers will pay a termination indemnity in cases of voluntary termination (esp. senior managers). In such cases the amount of termination indemnity is often less than the amount which would have been paid in the case of involuntary termination. This is only practicable if the termination indemnity is pre-funded and the gap between the amount paid in case of involuntary or voluntary termination will depend on the means of funding. Practice will affect company costs. Does the company pay severance pay in cases of voluntary termination? And if so, then how is it calculated?
Does the company make payment for unused days’ sickness?
Does the company make payment for unused vacation?