Severance pay is usually based on length of employment. For example, it could be a week's pay for every year or service or a flat amount based on six weeks pay, or any other amount determined by the employer. When provided, it is given as either a lump sum or paid over a number of weeks.
A severance package may also include health insurance coverage for a certain period of time and other continuation of benefits coverage.
There is no requirement in the Fair Labor Standards Act (FLSA) for severance pay. Severance pay is a matter of agreement between an employer and an employee. The employer has no legal obligation to give severance pay to a departing employee.