DECA Human Resources Management Practice Exam

What is the term for an offer made by a company, including a severance package, in exchange for an employee leaving?

1. Bumping

2. Buyout

3. Absence

4. Bonus

The correct answer is: Buyout

The correct term for an offer made by a company, including a severance package, in exchange for an employee leaving is a buyout. A buyout typically involves a financial incentive offered to employees as an option to voluntarily resign or retire from their position. This arrangement is often designed to reduce the workforce while minimizing the potential complications and costs associated with layoffs. In many instances, a buyout can include additional benefits, such as a severance package that may consist of pay, health insurance coverage, or retirement benefits, which makes the option appealing for both the employer and the employee. The term "buyout" effectively encapsulates this agreement to vacate a position in exchange for financial consideration, reflecting a mutual understanding between the employer and the employee involved. Other terms mentioned do not accurately reflect this concept. For example, "bumping" usually refers to senior employees displacing junior employees based on seniority when a layoff occurs. "Absence" is related to time not worked or days off taken by an employee, not an exit agreement. Lastly, "bonus" generally refers to additional compensation earned for performance or results, rather than an incentive to leave the company. Understanding these distinctions is key to grasping the terminology used in human resource