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What is a 'Severance Pay'

Posted by : rohit dhanda   25 March 2017

What is a 'Severance Pay'
Severance pay is the compensation an employer provides to an employee who has been laid off, whose job has been eliminated, who has decided to leave the company through mutual agreement, or who has parted ways with the company for other reasons. In addition to pay, severance packages can include extended benefits, such as health insurance and outplacement assistance, to help an employee secure a new position.

BREAKING DOWN 'Severance Pay'
Not all companies provide severance pay, and businesses typically issue severance pay on a case-by-case basis and as dictated by any employment contracts. For example, when Superintendent Stan Rounds agreed to resign from the La Cruces Public Schools, the New Mexico Public Education Department and the Third Judicial District Court had to approve his $140,000 severance package to ensure it met state guidelines and Education Board expectations. As he had one year left on his contract when he agreed to resign, his severance package may represent his annual compensation.
In contrast, when businesses fail to offer severance packages, it can upset staff and create negative public relations. To illustrate, when the Four Seasons closed in 2016, it only offered its displaced employees a total of $500,000. Severance payments for front-of-house staff were as low as $600, regardless of how long the employees were with the company. a move that attracted much criticism.

Do Businesses Have to Offer Severance Pay?
No law requires employers to provide severance pay. However, if the employee's contract stipulates he receives severance pay upon dismissal or if the employee handbook promises severance pay, the company is legally obligated to follow through with those pledges. Additionally, if the company makes a verbal promise to provide an employee with severance pay, it must also uphold that agreement.

Regardless of whether a company offers severance pay, the Fair Labor Standards Act (FLSA) mandates an employer must pay the employee who has been terminated through his last day of work, and the employer must also pay any vacation time the employee has accrued.

Does Severance Pay Affect Unemployment Benefits?
Severance pay can affect unemployment compensation in two distinct ways. If the employer pays the employee severance fee in a lump sum, the employee can apply for unemployment insurance right away as he is no longer on the company's payroll. However, in some cases, companies issue severance pay over a period of several months, and through that process, the employee is still technically on the payroll, even if he does not go to work. As a result, he cannot apply for unemployment. Similarly, if an employee has unused vacation time, he is on the payroll as he uses it.

In other cases, severance pay affects unemployment compensation because of the contracts many people sign when they accept severance pay. In exchange for offering severance packages, some companies make their employees sign statements saying they voluntarily resigned from their posts. These agreements prohibit the employee from claiming unemployment insurance, as it is reserved for people who are dismissed from their jobs involuntarily.

NEXT UP BACK PAY
Severance Pay
Terms Of Employment
Back Pay
Special Employer
Key Employee
Highly Compensated Employee
Corporate Pension Plan
Exempt Employee
General Employer
Constructive Discharge Claim
Terms Of Employment
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The conditions that an employer and employee agree upon for a job. Terms of employment include an employee's job responsibilities, work days, hours, breaks, dress code, vacation and sick days and pay. They also include benefits such as health insurance, life insurance and retirement plans. Employees whose skills are in higher demand will have an advantage when negotiating terms of employment.


BREAKING DOWN 'Terms Of Employment'
Most employment contracts in the United States are at-will, meaning that either the employer or employee can legally terminate

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Regarding itr

Posted by : rohit dhanda   25 March 2017

when its above 1.5 lacs per annum go for professional income and pay profession tax enrollment tax, maintain minimum books of accounts

when its below 1.5 lacs, it may be professional income or income from other sources

New Topic

Composition scheme under vat

Posted by : Harshit Agarwal   25 March 2017

Hi ..can anyone answer the implication of ITC on the closing stock of dealer under composition scheme who is willing to opt for normal scheme..I.e. Tax paid on purchases made from registered dealers will be liable as input tax credit on the closing stock of goods at the time of further sale

if the dealer is willing to opt for normal VAT U.P. Scheme from composition ?  

Do quote with relevant sections if one can avail ITC at the time of the sale under normal scheme ,of closing stock held under. Composition one ?


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Form c

Posted by : Ajit Hegde   25 March 2017

No. Only for those goods that are mentioned registration certificate (list of commodities) and used in mfg / resale or other purposes in the above screenshot, C form can be issued.

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Please help

Posted by : CA CS Gopal Somani   24 March 2017

If you would like to know how to plan studies for Exam , You can check my video on youtube. "How to Study/Self Study for CA/CS/CMA Examination - By CA Gopal Somani "  

https://youtu.be/gj4qVGgfZow  

Please let me know if you have any queries.
 


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students

Posted by : CA CS Gopal Somani   24 March 2017

I agree with the reference books name provided by Rahul.

If you would like to know how to plan studies, you can check my video on youtube. "How to Study/Self Study for CA/CS/CMA Examination - By CA Gopal Somani "

 

https://youtu.be/gj4qVGgfZow

 

Please let me know if you have any queries.
 


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self study

Posted by : CA CS Gopal Somani   24 March 2017

I agree with the reference books name provided by Rahul.

If you would like to know how to plan studies, you can check my video on youtube. "How to Study/Self Study for CA/CS/CMA Examination - By CA Gopal Somani "

https://youtu.be/gj4qVGgfZow

Please let me know if you have any queries.
 


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Tds when sales reduced to less than 1cr?

Posted by : CA Varsha Naik   24 March 2017

- Partnership Firm liable to deduct TDS irrespective of Turnover limit


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Best reference book for idt cma inter 2016

Posted by : CA CS Gopal Somani   24 March 2017

Yes, Bangar is best 


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Cash sales

Posted by : CA Varsha Naik   24 March 2017

-For 40(A)(3) Payments upto f.y 2016-17 limit is Rs. 20000.

-Rs 10000 limit applicable from 1.4.2017

 


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Tax return

Posted by : akhil   24 March 2017

Hi,
may I know whether security transaction tax(STT) is paid while selling the shares????

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Form c

Posted by : Gopalakrishnan Mahalingam   24 March 2017

It s a jym equipement. purchased for the purpose of therir employees. Can we get C form for that?


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Severance pay

Posted by : akhil   24 March 2017

wat is severance pay????

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Demat of shares

Posted by : Parmar Finance   24 March 2017

Hi,

Seen your post of query related to demat of your dad's shares. I provide consultancy related to sell /transfer / Demat of physical shares. I would be glad to provide the service related to your shares tfr/demat, if not done already.

Please share further info on my email yes4finance at gmail doc com or feel free to call me up on nine two two three four four two zero four four.

Parmar Finance


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Mock test for cs executive & cs foundation - absolutely free

Posted by : Lucky   24 March 2017

Visit www.mcqtestonline.com for mock test for all CS Executive subjects which are objetive based (Tax Law, Cost and Manamgement Accounting, and ILGL) on www.mcqtestonline.com


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Transfer procedure of physical shares

Posted by : Parmar Finance   24 March 2017

Hi,

Seen your post of query related to tfr/ demat of shares in your dad's name as well as grandamma. I provide consultancy related to sell /transfer / Demat of physical shares. I would be glad to provide the service related to your shares tfr/demat, if not done already.

Please share further info on my email ID yes4finance at gmail doc com or feel free to call me up on nine two two three four four two zero four four.

Parmar Finance


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Gratuity

Posted by : Suresh Pai S   24 March 2017

No. They are not. If you can, read the definition they are telling about continuous service.

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Mock test for cs executive & cs foundation - absolutely free

Posted by : Lucky   24 March 2017

you can practice CS Foundation and CS Executive mock test online on www.mcqtestonline.com 

 


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Minor inherited fixed deposits worth 50 lacs. int.inc. >2..5

Posted by : samir   24 March 2017

those who have claim father`s income after his death have to 

first take his death certificate and have to pay all the income tax

due

no tax is lavied on receiving the inherited assets in india

 When the son sells this property,

he would be liable to pay Capital Gains on it  ...

 

 


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Can icai reduce marks in certified copies?

Posted by : Suresh Pai S   24 March 2017

Yes. That's a nice initiative. All the very best. The lack of clarity about the Valuation is a major issue as you told. Your help will be pure gold.


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