Buyout Program

A program in which an employer asks employees to quit voluntarily in exchange for a lump sum payment, or a series of payments over a brief period of time. A buyout program generally is created when the employer is facing long-term financial difficulties. It releases the employer from the liability of continuing to pay salary, insurance, pension payments, and so forth. If a sufficient number of employees participate in a buyout program, the financial situation of the employer may improve sufficiently to avoid involuntary layoffs.