Regression Case Study and Report

Severance Pay

Severance pay is the amount of money and benefits paid by an employer to an employee upon their departure from the company. This fee is paid to the employee to enhance their layoff benefit and help them maintain their quality of life while looking for a new job. A contract or a written severance policy can oblige the employer to give the employee severance pay. Severance pay, on the other hand, is solely a gesture of goodwill on the part of the employer. No law requires employers to pay specific severance pay to their employees upon termination. Due to the lack of established laws, several companies have developed their own severance pay policies during or after employment.Because of use of this, it has, in turn, resulted in lawsuits against these companies by their terminated employees who site unfairness in the compensation process. This study is carried out to determine whether the terminated employees were reasonably given a severance pay to the previously terminated employees. The dataset used is a random sample of the relationship between the number of weeks of severance pay (Weeks PS) and the number of years with the company (Years). Weeks PS is the dependent variable while Years is the independent variable.

Linear Regression Model

The following linear regression can be fitted to describe the data.

Weeks SP = +Years +

The fitted model can be written as;

Weeks SP =+Years

Weeks SP = 3.6214 + 0.5743 Years

From table 1 attached, the probability of T-test given by the p-value is less than 0.05 indicating that a number of years with the company affected the number of weeks of severance pay significantly. From the model, number of years with the company significantly affect number of weeks of severance pay positively; if the years increase by one the number of weeks of severance pay increase by 0.5743. The constant coefficient affect Sales positively significantly. If all the factors are zero then the employees are entitled to 3.621 weeks of severance pay. The scatter plot graphs attached show that there is a strong positive relationship between the number of weeks of severance pay and number of years the employees have been with the company.

Conclusion

In conclusion, the analysis shows that the named employee, Bill Smith, was given a severance package that was fair to the compensation given to the previous employees. This package should have ranged between 5 and 13 weeks as shown by the 95% confidence and prediction intervals with a standard error of 1..917. To avoid this disputes between employers and employees companies should include clear severance policy stated in the employee handbook.