A payment made to an employee when their employment is terminated immediately, instead of requiring them to work through a specified notice period. This payment covers the salary and benefits the employee would have received during that notice timeframe. For instance, if an employee is entitled to a month’s notice, but is terminated without working through that month, they would receive a payment equivalent to their one month’s salary and benefits. This form of compensation is often used to facilitate a smoother and quicker separation process.
The practice offers distinct advantages for both employers and employees. For employers, it allows for immediate removal of the employee from the workplace, minimizing potential disruptions or conflicts. For employees, it provides immediate financial compensation, allowing them to seek new employment opportunities without delay. Historically, the concept evolved to balance the employer’s need for operational flexibility with the employee’s right to fair treatment and income security during a transition period.
