Losing your job can be a stressful and uncertain time, but negotiating a fair severance package can help ease the financial burden and provide some much-needed security. However, many employees don’t fully understand their rights when it comes to severance packages, and as a result, they may miss out on important benefits or accept less than they deserve.
This guide aims to help laid-off employees navigate the often complex process of negotiating a severance package by providing an overview of their legal rights, tips for preparing for negotiations, and strategies for effective communication. By understanding your rights and being prepared to negotiate, you can ensure that you will receive a fair and reasonable severance package that meets your needs and provides some financial stability while you are transitioning to a new job.
Understanding Your Rights
When it comes to negotiating a severance package, it’s important to know your rights as an employee. A severance package is a set of benefits that an employer offers to an employee who is leaving the company, often due to layoffs or other types of job loss. These benefits can include things like a lump sum payment, continued health insurance coverage, and outplacement services.
Different types of severance packages may have different requirements and benefits, so it’s important to understand what you’re entitled to. For example, some packages may require you to sign a release of claims, which means that you agree not to sue the company for any reason related to your employment. Other packages may include non-compete agreements, which limit your ability to work for a competitor for a certain period of time. Some benefits may be subject to state or federal laws.
It’s also important to be aware of common mistakes that employees make when negotiating a severance package. For example, you may not realize that you have the right to negotiate the terms of the package, or you may accept the first offer without fully understanding what you’re entitled to.
Preparing for Negotiation
Before entering into negotiations for a severance package, it’s important to take some time to prepare. This can help you determine your goals and research your company’s policies and past practices.
Determine Your Goals
The first step in preparing for negotiation is to determine your goals. This means thinking about what you want to achieve from the severance package and what benefits are most important to you. For example, you may want a larger lump sum payment or extended health insurance coverage.
Here are some common items that may be negotiated in a severance package:
- Severance pay (amount or length of payments)
- Health insurance coverage (percentage of premiums covered, length of coverage, which benefits are continued)
- Outplacement services (amount covered, length of services, types of services)
- Stock options or equity (number of shares or accelerated vesting)
- Retirement benefits (accelerated vesting, continued employer contributions, payment of outstanding loans)
- Vacation or sick pay (payment of unused time)
- Bonus payments (payment of full or partial amount of future bonus)
- Non-compete or non-disclosure agreements (terms of agreement)
- Return of company property (what you keep or for how long)
- References or letters of recommendation (when you will receive the documents and from who)
Research Your Company’s Policies and Past Practices
It’s important to note that the specific items that are negotiable may vary depending on the company and the circumstances of the layoff. Research your company’s policies and past practices when it comes to severance packages. This can help you understand what your employer is likely to offer and what you can expect in negotiations.
You can start by reviewing your employee handbook or contacting HR to ask about the company’s severance policies. You can also talk to other employees who have gone through a similar process to get a sense of what they received in their severance packages.
By taking the time to prepare before entering into negotiations, you can be better equipped to communicate your needs and wants to your employer and negotiate a fair and reasonable severance package.
Negotiating a severance package can be a complex and emotional process, but there are some strategies that can help you achieve your goals and communicate effectively with your employer.
1. Be Professional and Respectful
First and foremost, it’s important to approach negotiations in a professional and respectful manner. This means avoiding personal attacks or emotional outbursts and focusing on the issues at hand. Remember that your employer is also likely going through a difficult time and may be more willing to negotiate if you maintain a positive and respectful attitude.
2. Focus on Your Needs, Not Your Wants
When negotiating a severance package, it’s important to focus on your needs rather than your wants. This means thinking about what benefits are most important to you and communicating those needs clearly to your employer. For example, if you have significant medical expenses, you may want to negotiate for extended health insurance coverage rather than a larger lump sum payment.
3. Be Willing to Compromise
Negotiation is all about finding a compromise that works for both parties, so it’s important to be willing to give and take. This means being open to different options and considering creative solutions that meet both your needs and your employer’s needs. For example, you may be willing to accept a smaller lump sum payment in exchange for longer health insurance coverage.
4. Know When to Walk Away
Finally, it’s important to know when to walk away from negotiations if they’re not meeting your needs or if your employer is not negotiating in good faith. While it can be difficult to turn down a severance package, it’s better to hold out for a fair and reasonable agreement than to accept something that doesn’t meet your needs.
By using these negotiation strategies, you can be better prepared to communicate your needs and wants to your employer and negotiate a fair and reasonable severance package that meets your needs and provides some financial stability during a difficult time.
Finalizing the Agreement
Once you’ve reached an agreement with your employer, it’s important to take some time to review the terms and ensure that everything is in writing. This can help you avoid any misunderstandings or disputes down the line.
1. Review the Terms
The first step in finalizing the agreement is to review the terms carefully. Make sure that all of the benefits and conditions you negotiated are included in the agreement and that there are no surprises. If you have any questions or concerns, don’t hesitate to ask your employer or seek legal advice.
2. Get Everything in Writing
Once you’re satisfied with the terms, it’s important to get everything in writing. This means drafting a formal agreement that outlines all of the terms and conditions of the severance package. Make sure that both you and your employer sign the agreement and that you each keep a copy for your records.
3. Consider Legal Advice
If you have any concerns about the agreement or if you’re not sure whether it’s fair and reasonable, it may be a good idea to seek legal advice. An employment lawyer can review the agreement and provide guidance on whether it’s in your best interest.
4. Follow Up on Promises
Finally, it’s important to follow up on any promises made by your employer as part of the severance package. For example, if your employer agreed to provide outplacement services or extended health insurance coverage, make sure that these promises are fulfilled. If there are any issues, don’t hesitate to follow up with your employer or seek legal advice.
By taking the time to finalize the agreement carefully, you can ensure that you receive the benefits you negotiated for and avoid any misunderstandings or disputes down the line.
As a laid-off employee, there are various things you may be able to negotiate for as part of your severance package. These may include stock options, retirement benefits, vacation or sick pay, bonus payments, non-compete or non-disclosure agreements, and references or letters of recommendation. The specific terms that can be negotiated may depend on various factors, such as the company’s policies and practices, the employee’s tenure and performance, and the state or jurisdiction in which the employee is located.
It’s important to research your company’s policies and past practices when it comes to severance packages and to communicate your needs and wants clearly to your employer during negotiations. Seeking legal advice may also be helpful if you have any concerns or questions about the agreement. Ultimately, negotiating a fair severance package can help you transition more smoothly to your next job and protect your financial and professional interests.
As you negotiate your severance package, it’s also important to start thinking about your job search. Your employer may provide reimbursement for the outplacement services of your choosing. Consider Find My Profession’s reverse recruiting and resume writing services to help you land and ace interviews. With the right support and resources, you can successfully transition to a new job and continue building your career.