Is severance normal at a startup or a game studio? I would think first priority would be contractual obligations (payroll, contractual severance, vendors, etc.) and then only then severance.
In my experience, severance (as part of your employment agreement) is not normal or expected for any job in the USA. I’ve been working for decades and have never seen even a hint of it in any employer’s benefits info. Severance is something only big shot executives get.
I got a severance package from a part time bank teller job after they closed the branch I worked at. I also got a severance package when a small business I worked at went under. I'd say severance packages are a lot more common than you think they are.
When the one game job i worked at laid everyone off and files for bankruptcy i got 6 weeks severance paid for by the government about two months later. Of course this was Australia where companies pay a per employee tax to support this.
My father has received severance - not once, but twice from Kodak Canada. The first time was during their bankruptcy, the second time was because they cost-optimized most of the senior people out of his project.
It is normal and expected for the executives though. Somehow, even in the worst bankruptcies or closures, they always seem to end up with golden parachutes. Must be luck.
It can be, if layoffs are happening. From what I know, LucasArts employees got a nice bonus when Disney it shut down. Some other companies I worked at also have given it out, though it depends on how dire things are.