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Beit Midrash Series P'ninat Mishpat

Chapter 78

Is Severance Pay Part of Salary?

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Case:
P'ninat Mishpat (575)
Various Rabbis
77 - Testimony That Was Accepted in the Absence of a Litigant
78 - Is Severance Pay Part of Salary?
79 - Mechila As Part of a Broken Agreement
Load More
The defendant (=def) divorced his wife, the plaintiff (=pl). They signed a settlement according to which def would pay pl $500 a month. There was a stipulation that if his income would go down, def’s payments would go down in a manner that considers the needs of both sides. Some time later, pl was fired from his job and, as a result, received severance pay. Pl wants to receive a percentage of the severance pay, as if it were regular salary. Def says that severance pay is like a present and that, in any case, pl does not deserve bigger payments because, during the time his salary was going down, pl was affluent enough to afford buying a new car.


Ruling: In discussing the ha’anaka (parting gift) that a Jewish servant receives upon going free, the Sefer Hachinuch (#482) says that although the mitzva applies only at the time of yovel, we can still learn from the practice and expect that anyone who employed a compatriot will give him a parting gift when his employment ends. Some poskim view this as the source for the minhag that turned into the law of the land to give severance pay when one is fired.
The S’ma (86:2) says that shibuda d’Rabbi Natan, whereby if A owes B and B owes C that C can extract payment from A, does not apply to an obligation of ha’anaka. This is because ha’anaka is not a true obligation but is a merciful present. If this is the way we view severance pay, pl would not be entitled to a part of def’s severance pay. However, since nowadays, severance pay is part and parcel of employment conditions upon which an agreement is based, it is akin to salary, and there is basis for pl’s claim. This seems true when one considers that severance pay is figured out on the basis of one month’s salary for every year of work.
The settlement sets the alimony payment at $500, based on def’s salary. It makes no difference what constitutes def’s salary. The $500 that def paid includes any amount due from the severance pay, and pl is not entitled to an additional percentage of that payment.
The settlement reads that if def’s income goes down dramatically, alimony will go down according to the "needs of the two sides." Beit din does not accept def’s claim that the amount be reduced because pl bought a new car. The needs are what must be addressed, not the amount of money the sides have. If pl has a car and an apartment, she has significant expenses. Rather, we should look at the alimony payments as a percentage of def’s earnings. At the time the agreement was made, they were one sixth of def’s income. He should continue paying at that percentage rate.
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