What formula is used to determine an employee's separation pay?

The correct formula for determining an employee's separation pay involves calculating one-half month's pay for each year of service. This approach is established in various labor laws and practices where the separation pay is designed to provide some financial support to employees who are leaving the company under specific conditions.

Using one-half month's pay as a base allows for recognizing the duration of employment while also ensuring that the benefit is manageable for employers and equitable for employees.

Other options reflect different calculations which are not aligned with the standard practice for separation pay determination. For example, one month's pay per year would significantly increase the employer's obligation compared to half a month's pay and may not be sustainable.