Legal Definitions - tin parachute

Definition: A tin parachute is a provision in an employment contract that provides severance benefits to a corporate employee, especially those below the executive level, in case of a takeover. These benefits are usually less generous than those provided under a golden parachute. It is also known as a silver parachute.

• When the company was acquired by a larger corporation, the employees with a tin parachute received a few months' salary as severance pay.
• John's employment contract included a tin parachute clause that ensured he would receive some compensation if the company was taken over.

These examples illustrate how a tin parachute works. In the event of a takeover, employees with a tin parachute clause in their contract will receive some form of compensation, although it may not be as generous as the benefits provided under a golden parachute. This provision is designed to protect employees from sudden job loss and provide them with some financial security during a period of transition.