Someone was laid off by a yeshiva last week- in the middle of the zman. My impression is that minhag requires that they pay him to Rosh CHodesh Iyar, + pitzuyim of one month per year of his working for them Is that correct? He is contending that since it is an American Yeshiva they are obligated to pay him through the summer + pitzuyim- but I do not know that there is a minhag to sustain this.
He is certainly obligated to pay until Iyar (not inclusive). It is possible that he will have to be paid until the end of the year, and this depends on whether there is a possibility of finding a new job in the Nissan ben ha-zemanim. If it is at least somewhat accepted to move from yeshiva to yeshiva during the Nissan break, the obligation to pay will not extend through to the end of the year.
Concerning the pitzuyim, some batei din have the custom of enforcing this payment, as based on a ruling of Rav Moshe Feinstein zt”l. I don’t know how universal this custom is, and it will only be binding if it universal. [In Israel, there is certainly an obligation to pay compensatory payments.]