Why do companies offer severance?

Question

In municipalities where severance isn't a legal requirement, what incentive do the employers have to offer severance? Are they really doing it because it's the right thing to do, or are there other economic incentives that I'm not aware of?

tacostakohashi · Accepted Answer

Often the severance is offered alongside an agreement not to sue the company for anything, not to disparage, etc, and you only get the severance if you agree to the contract.
It can be a negotiation, you can tell them you will decline the severance and hold onto your ability to sue and disparage, and see if their offer increases, or see if you can adjust the terms of the agreement, etc.
This is a big reason why you rarely hear bad things about working at BigCo, at least not specific stories in the media about specific people that were perfectly competent but just lost out to the political process, any any such complaints are just vague, anonymous, unverifiable mumblings on forums.

ntietz · Answer

My understanding is that it's often used as an incentive to get folks to sign NDAs or other agreements on the way out the door. Especially important to them when someone was forced out in less than ideal circumstances, so they'll buy your silence.

nickfromseattle · Answer

When a company does layoffs, those who remain employed are watching how the company treats former colleagues on their way out the door.