As long as you stick to easily documented facts and keep it brief, you will stay out of trouble. If you decide to give more expansive references, use caution. If you make false statements about a former employee with the intent to harm his reputation, you can be sued for defamation. For more information, see What to Tell Prospective Employers and Your Workforce About a Former Employee . No law requires severance pay.
Many employers customarily offer severance pay to all long-term employees.
A severance package helps ease the burden of being fired and may help the employee transition to a new job. A severance package may also help soothe the bad feelings of a fired employee. Not only will this ease your conscience when you have to fire employees, it will also make lawsuits from former employees less likely. After all, a former employee who has been rewarded for prior service to the company may not be particularly motivated to sue. Some employers routinely ask employees to sign a release as a condition of receiving a severance package.