Honest question, if someone is performing horribly, why do they deserve a severance package? Isn't that was unemployment insurance is for?

1. They might be a good worker, but a bad fit for their role. That’s as much on the hiring manager as the employee.

2. People, even lousy workers, talk. Treating people with respect on their way out may decrease the person’s negativity/bitterness. Consider it a marketing expense.

3. Severance packages come with legal releases attached, at least in the US. Less risk of lawsuits, frivolous or otherwise.