Is severance pay legally required?

In most EU countries and in Georgia, yes — when the employer initiates termination without cause. In the US it is typically not legally required at the federal level (though some states have notice requirements). Check local labor law.

How is severance pay calculated in Georgia?

Georgian Labor Code requires at least 30 days notice or 30 days pay-in-lieu, plus (for redundancy / business-reasons terminations) at least 60 days of salary as severance compensation. Use the Georgian severance calculator at /tools/georgia-severance-calculator for an estimate.

Do employees on probation get severance?

In most jurisdictions, employees terminated during a probationary period receive reduced or no severance compared to confirmed employees, subject to statutory minimums. In Georgia, probation cannot exceed 6 months.

Severance is typically subject to income tax. In Georgia, it is also subject to pension fund contributions. Treatment varies by jurisdiction — consult a payroll specialist or accountant.

What is the difference between severance and redundancy pay?

They overlap. "Severance" is the broader term; "redundancy pay" specifically refers to compensation owed when a role is eliminated for business reasons (restructuring, business closure). In many jurisdictions redundancy pay is a defined statutory minimum.

HR GLOSSARY · Employment law

Severance pay

Also known as: severance, redundancy pay, termination pay

Severance pay is the compensation an employer pays to a departing employee, typically required by law or contract when the employer initiates the termination without cause. The exact amount depends on local labor law, length of service, and the reason for termination.

Severance is one of the few HR concepts where local labor law diverges sharply — a US employer might owe nothing beyond unused vacation, while a Georgian, French, or German employer owes a defined statutory minimum that scales with tenure. The line between voluntary departure (no severance owed) and employer-initiated termination (severance owed) is where most disputes happen. Documenting the reason for termination and following the statutory notice or pay-in-lieu rules is the single most important compliance discipline for a growing employer.

When severance is typically owed

Employer-initiated termination without cause (redundancy, restructuring, business need)
Termination of a fixed-term contract before the end of the term
Statutory layoff or downsizing programs
Mutual separation agreements (negotiated, often above the statutory minimum)

When severance is typically NOT owed

Voluntary resignation by the employee
Termination for cause (gross misconduct, fraud, criminal conduct)
Natural expiry of a fixed-term contract (in most jurisdictions)
Probationary period dismissals (subject to statutory limits)

Notice vs pay-in-lieu of notice

Most labor codes give the employer two options: (a) give the employee statutory notice, during which they work and are paid normally, or (b) pay them the same amount as a lump sum and end the employment immediately. Pay-in-lieu is faster and lower-conflict but typically costs the same. Some jurisdictions allow a hybrid (partial notice + partial pay-in-lieu).

Frequently asked questions

Is severance pay legally required?: In most EU countries and in Georgia, yes — when the employer initiates termination without cause. In the US it is typically not legally required at the federal level (though some states have notice requirements). Check local labor law.
How is severance pay calculated in Georgia?: Georgian Labor Code requires at least 30 days notice or 30 days pay-in-lieu, plus (for redundancy / business-reasons terminations) at least 60 days of salary as severance compensation. Use the Georgian severance calculator at /tools/georgia-severance-calculator for an estimate.
Do employees on probation get severance?: In most jurisdictions, employees terminated during a probationary period receive reduced or no severance compared to confirmed employees, subject to statutory minimums. In Georgia, probation cannot exceed 6 months.
Is severance taxed?: Severance is typically subject to income tax. In Georgia, it is also subject to pension fund contributions. Treatment varies by jurisdiction — consult a payroll specialist or accountant.
What is the difference between severance and redundancy pay?: They overlap. "Severance" is the broader term; "redundancy pay" specifically refers to compensation owed when a role is eliminated for business reasons (restructuring, business closure). In many jurisdictions redundancy pay is a defined statutory minimum.