Severance payments are pragmatic. Employers ought to consider allowing for severance payment and neutral letter-of-reference provisions in their separation agreements where there is no employee misconduct.  These provisions often generate goodwill from a departing employee, thereby reducing lawsuits, and the provisions can also be used to bind an employee to confidentiality, non-disparagement, and non-compete obligations.  Severance payments demonstrate humaneness and compassion on the part of the employer.  Employment lawsuits are expensive and generate bad public relations for a company.  As long as the severance compensation is not excessive, it really is a no-brainer in terms of a cost-benefit tradeoff for an employer.  What is an appropriate severance payment will depend on the industry and the level of the employee.