Under New Jersey law, there’s no requirement for a company to hand an employee a severance package when he’s been terminated. The question rises, why would a company do so? There’s a couple reasons why a company might. The first is they might have a policy company-wide to provide severance based on a formula of service and effectiveness of the employee among other reasons. The biggest reason why a company will offer a severance package, though, is to buy-out any risk of a lawsuit. Whenever a company offers a severance package to an employee, what they’re really doing is they’ll give you a small amount of money, and in return, you’ll agree never to sue them. Even if you have a claim for discrimination or harassment, or under the Whistleblower Act, or for overtime claims, you’re waiving your right to sue in return for the severance package. What they’re doing is they’re buying you off.