Severance pay is a sum of money usually for which an employee is eligible when he is fired or laid off. Since employers are not legally obligated to provide severance packages to displaced employees, it is difficult to determine an "average severance pay." However, companies typically use similar formulas to determine how their severance packages are put together. An employee's severance pay is typically based upon years of service, level reached in the organization, size of the organization, and whether the severance is for cause. Additionally, the size of the severance package might be determined by whether the company is for-profit, non-profit, public, or private. Typically, private for-profit companies are able to offer larger, more generous severance packages. In addition, stipulations for severance pay are written into most employee contracts.