Main image of article Negotiating a Severance Package

Even if you’re prepared for it, losing your job can be a terrible thing. However, it’s crucial to remember that, even on your way out the door, you still have options and leverage. With that in mind, one of your top priorities should be negotiating an adequate severance package.

When it comes to severance packages, remember that a company’s initial offer is rarely set in stone. You can absolutely negotiate for a package that better suits your needs and circumstances. Do you want to keep your stock options? Would you prefer that payment as a lump sum? You may have more latitude to negotiate these points (and others) than you may think!

What Triggers Severance Packages?

In simplest terms, a severance package is offered to employees forced to leave a company against their will. It could include payments based on months of service; payment for any accrued, unused PTO; stock options; health insurance; commission payments; and more. Here are some specifics, which can vary wildly depending on the company and your individual circumstances:

  • Severance Pay: Usually calculated based on your tenure.
     
  • Continuation of Benefits: This often means health insurance, including COBRA benefits.
     
  • Outplacement Services: A company may offer you job search assistance.
     
  • Vacation Pay and Accrued Time: You’ll get a payout for unused PTO time.
     
  • Noncompete Clauses: Depending on the state, you may be asked to sign a noncompete clause or other legal documents (surrendering intellectual property, etc.). Analyze these carefully; you may also wish to consult with a lawyer. Not all agreements are binding in all states, for instance.

Depending on your position and tenure, the separation agreement may touch on legal claims, older workers benefit protections, and more.

Here are some circumstances in which you might receive a severance package:

  • Layoffs:  Restructuring or downsizing will trigger a severance package to those impacted.

  • Performance-Based Termination: Depending on the company and the circumstances of the termination, you may receive severance of some kind.

  • Wrongful Termination: If you were terminated for illegal or discriminatory reasons, you may end up with a severance package (although lawyers may need to be involved).

Negotiating Your Severance Package

No matter what your circumstances, do you best to negotiate for the maximum possible severance package. Here are some crucial things to keep in mind:

  • Know Your Maximum: Research average severance packages in your industry and with your experience level. This sets a benchmark for your negotiations.
     
  • Understand the Company's Policy: Review your employment contract and company handbook to determine existing severance policies and potential leverage points.

  • Don’t Let Them Rush You: Take time to review your offer; you may also wish to consult an attorney.

  • Be Specific: Don’t be afraid to ask explicitly for everything you want with regard to pay, benefits duration, and non-compete clauses.

  • Always be Professional: Layoffs are an emotional time, but whatever you do, don’t get angry. Stay cool and professional.

How to Maximize Your Severance Package

Want to give yourself a little more leverage in negotiations? Follow these tips:

  • Use Data: Come prepared to show your impact on the organization and how that’s worth a generous severance.
  • Consider an Attorney: An employment attorney can help you sort out thorny negotiations.
  • Be Prepared to Be Flexible: You may not get everything you want from negotiations, and that’s OK. Ask for everything you think you deserve and see what happens.

Your severance package can help give you a bit of financial security as you transition between jobs. It’s your duty to maximize it as much as you can.