What are the difference b/w severance cost and retrenchment compensation? In India Severance pay also called gratuity pay?
From India, Hyderabad
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3From India, Hyderabad
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In India, severance pay means severance pay or retrenchment compensation only. Gratuity is different, and it is not available to all employees but restricted to those who are leaving the organization after rendering at least five years of service.
Severance pay or retrenchment compensation in India is available only to workmen, and no manager needs to be paid this compensation. On the other hand, gratuity is available to all employees irrespective of their roles and functions.
From India, Kannur
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Severance pay or retrenchment compensation in India is available only to workmen, and no manager needs to be paid this compensation. On the other hand, gratuity is available to all employees irrespective of their roles and functions.
From India, Kannur
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Retrenchment Compensation and Severance Costs
Generally, retrenchment compensation is payable to those covered under applicable acts like the ID Act, as a statutory payment. Apart from this, there are certain terms and conditions of appointment providing such compensation in case of 'retrenchment' under contractual obligations. Many times, this is resorted to when the closure of operations of units occurs.
Severance Costs
'Severance cost' is payable mostly to those in top management positions, e.g., Board members (Chairman, President/VP, Directors, etc.) who may have shareholding or otherwise be paid some sort of profit-sharing percentage from the company. Very senior-level executives below board level, such as Executive Directors, Chief GMs, etc., are also eligible for such payments. These payments are integrated into well-defined terms and conditions executed in this regard. This measure may also address the settlement of shareholdings at the time of separation. It helps entities amicably sever ties with top management personnel who have been instrumental in the company's policies and performances and possess in-depth knowledge of the existing company.
Golden Handshake Schemes
In the past decades post-1991 liberalization, many PSUs were closed down combining both 'Termination compensation' and 'Severance cost' through what is said to be a 'golden handshake' - VRS & VSS (Voluntary Separation Scheme), STBP (Special Termination Benefit Package), etc. These schemes involved additional benefits beyond Termination Compensation to encourage affected employees to avail themselves of these benefits.
From India, Bangalore
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Generally, retrenchment compensation is payable to those covered under applicable acts like the ID Act, as a statutory payment. Apart from this, there are certain terms and conditions of appointment providing such compensation in case of 'retrenchment' under contractual obligations. Many times, this is resorted to when the closure of operations of units occurs.
Severance Costs
'Severance cost' is payable mostly to those in top management positions, e.g., Board members (Chairman, President/VP, Directors, etc.) who may have shareholding or otherwise be paid some sort of profit-sharing percentage from the company. Very senior-level executives below board level, such as Executive Directors, Chief GMs, etc., are also eligible for such payments. These payments are integrated into well-defined terms and conditions executed in this regard. This measure may also address the settlement of shareholdings at the time of separation. It helps entities amicably sever ties with top management personnel who have been instrumental in the company's policies and performances and possess in-depth knowledge of the existing company.
Golden Handshake Schemes
In the past decades post-1991 liberalization, many PSUs were closed down combining both 'Termination compensation' and 'Severance cost' through what is said to be a 'golden handshake' - VRS & VSS (Voluntary Separation Scheme), STBP (Special Termination Benefit Package), etc. These schemes involved additional benefits beyond Termination Compensation to encourage affected employees to avail themselves of these benefits.
From India, Bangalore
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Abstr-pay-gratu ity.doc
Variable Pay & Executive Compensation.pd f