Negotiating a Better Severance Package

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Even in a fairly stable economy, job security can be fleeting. At a moment’s notice, and without warning, you could be ushered into a conference room and asked to sign a “separation agreement.” Although imminently displaced workers may not have much leverage in such situations, that shouldn’t stop them from trying to negotiate a better severance package. Here’s what you need to know:

Don’t Sign Anything

Don’t sign anything on the spot, since the separation agreement may contain a waiver of claims, advised Sam Perkins, a labor attorney and founding partner of Brody, Hardoon, Perkins & Kesten in Boston, Mass.

Employers are required to give employees some amount of time to consider a severance agreement, he said. Plus, you’ll need time to get over the shock, run some numbers and come up with a strategy. And since employers want to avoid claims and lawsuits, it makes sense to use your signature as a bargaining chip.

“If you receive a check, hold onto it if it includes severance,” said Pattie Hunt, Sinacole CEO and founder of First Beacon Group LLC, an HR advisory firm located in the Boston area. “Since cashing it may imply that you’ve accepted the terms and package.”

(Almost) Everything’s Negotiable

Although companies often use a formulaic approach to calculate severance, that doesn’t preclude you from negotiating a better deal. In fact, as long as you’re reasonable, and the company is solvent, Sinacole says employers will usually give you something more as long as you ask for it.

“The rule of thumb is one to four weeks of severance for every year of service, but you should always ask for an extension,” she said.

Calculate how long it will take you to find a new job or update your skills, and use that as justification for more severance. Another alternative: leverage your institutional knowledge by offering to provide ongoing technical support and advice in exchange for additional severance. Remember, you have nothing to lose at this point, so don’t be afraid to play the guilt card.

You may also be able to bargain over whether you get severance in a lump sum or as a salary continuation. Staying on the payroll may allow you to keep your insurance coverage but delay your ability to collect unemployment.

“Consider your circumstances and personal needs in formulating your request and strategy,” said Perkins. “For instance, if your family has health issues, asking your employer to pay for COBRA or extend your health insurance for a couple of months might be more valuable than another week or two of severance pay.”

Your employer will probably let you keep your cell phone and laptop, Sinacole added. Since organizations often pay for training courses and conferences in advance, seize the opportunity to network and enhance your marketability by asking to participate in those events through the end of the fiscal year. Likewise, ask your employer to honor previous commitments to reimburse you for certifications or tuition.

And keep in mind that it’s customary for large employers to provide outplacement services. If you haven’t changed jobs in a while, you might need assistance with resume writing, interviewing and goal setting.

Be sure to ask for a pro-rated bonus, if bonuses were part of your compensation package. And finally, always request a positive reference before signing a release of claims.

“Your agreement should state that you will receive a positive letter of reference,” Sinacole said. “Any promises made over the negotiating table should be documented in writing.”

Consult a Lawyer

It may be advisable to consult an attorney if you worked for the company for a long time or have a complex case.

“Most attorneys will give you free consultation,” Perkins said. He or she can determine whether you have the basis for a wrongful termination, retaliation or discrimination claim, or sufficient leverage to demand a larger payout.

For instance, a consultation might be worthwhile if you’re owed large matches to a 401(k) plan, salary increases, deferred compensation, stock options or stock, or if you made significant contributions to a startup.

“A lawyer can help you create a narrative around retaliation or age discrimination if it applies,” Perkins said. “In many cases, just sending a letter to your former employer laying out your case may increase your bargaining power and severance package.”

Image Credit: Halfpoint/Shutterstock.com

Comments

8 Responses to “Negotiating a Better Severance Package”

October 01, 2015 at 1:05 pm, Kathleen Walsh said:

Honestly, I never even considered trying to negotiate. The David and Goliath syndrome I guess. However, after reading this, I have tried–I may fail, but as it says, I really have nothing to lose. The point about a bonus came in handy also–as I have been laid off in Sept, I will not be eligible when they are paid next year. (Also, the company policy maxes out much lower than 2 weeks/year for my 18 years.)

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October 01, 2015 at 5:01 pm, Travis Nicks said:

This article had me laughing for a good 10 minutes. What fantasy world do people live in where companies would even CONSIDER giving a laid-off employee a laptop, phone, several months salary, extended health coverage, and then offer to write a good recommendation??? Please if anyone is aware of a company that does those things, let me know so I can turn in a resume!

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October 01, 2015 at 7:33 pm, Thomas Miller said:

They can be screwy. I was basically forced to sign a non disclosure agreement for my severance because the company was willing to allow me to keep the insurance that my wife required to keep her alive by covering the cancer medications she needs. I had no choice but to sign it to get the insurance. It is gone now and she is likely going to die but the agreement also denies my ability to sue the jerks because my termination was a retaliation of sorts.

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October 02, 2015 at 4:50 pm, Joe Outsourced said:

I agree with Travis, there are no companies out there (if there are please give names) that would even consider renegotiating you severance package. I was recently outsourced by a Fortune 100 company as they outsourced my position to India. My company has many H1Bs to fill the gaps thus there is no incentive to negotiate. I was giving 30 days to find another job (inside my company) or be laid off. By renegotiating you run the risk of taking all the time for the appeal (taking time away from looking for a new job) and even perhaps missing the deadline to send your non-disclosure/severance agreement back. If you are a gambler go ahead, renegotiate. Again, I’d love the author to supply some real world examples where someone in the tech field has successfully renegotiated their severance package to their liking.

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October 04, 2015 at 12:34 pm, Ex-Journo said:

I thought the same thing, but I renegotiated my company’s original severance offer and received additional 4 weeks’ salary, extended medical benefits for 5 months and a letter of recommendation. Bought my own laptop and phone. You have nothing to lose and I think that HR personnel are expecting a rebuttal.

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October 09, 2015 at 1:38 pm, RJ said:

Most places won’t hand over the check until the employee signs the agreement. An employment attorney said to sign as you are doing so under duress. Just my $0.02.

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August 17, 2016 at 2:58 pm, lulu bell said:

I got a new Plant Manager in May 2015 initially we got along well for about 6 months during that 6 month period he created several positions and hired several ex-co workers from a previous job. I am an Administrative Assistant II / Accounts Payables person working directly for him. I went on vacation in December 2015 for 9 days when I returned he was very harassing toward me petty, etc. Finally he tried to set me up and write me up in March 2016. I was not sure why but I went to the Director hjs boss and he was told to remove and discard the write-up. Every since then he has been retaliating against me , picking at me over 2 minutes on lunch or breaks etc,. Trying to create issues when there are none, blame things on me that has nothing to do with me. I after reaching out to the Director and HR Manager about the issues nothing was satisfactory done to me , to make it stop. So I reached out to Director of HR who then in turn b/c corporate and compliance has received so many calls concerning management and mistreatment at the plant. He has visited me 3 times now and today he said after hearing both of you together the relationship is very toxic its like oil & water and I don’t think we will be able to resolve its so many issues between you, He purposed if I can find something within the company he would be more than happy to replacement somewhere or he would even be willing to talk about a severance package deal for me. At this point how should I proceed because its clearthey are not going to let him go even if he is wrong and I have documented proof of harassment and bullying and detriment of character. So, I m thinking of negotiating a severance for myself that will help me until I locate another job. How should I proceed with the severance package if that is where we are without having to endure any more mistreatment.

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October 07, 2017 at 10:13 pm, Patty said:

Wow.I have negotiated more. It is not that hard

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