How to negotiate a severance package: Experts say the right mentality can get you more

February 22, 2023, 5:04 PM UTC
Businessman working alone in a glass office
In business, everything is negotiable. Even a severance package.
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With layoffs rolling through tech, media, and other sectors, tens of thousands of workers have recently found themselves out of a job—or may soon. While some of these firms are offering decent enough severance packages, there’s nothing to stop you from negotiating a better one.

Employers aren’t required to give severance packages, unless a union contract, employment contract, or company policy requires it. And if an employer does offer severance, it’s often a set standard based on each employee’s tenure so that organizations aren’t accused of discrimination.

That said, there is plenty to ask for to put yourself on better footing, says Kim Crowder, founder and CEO of Kim Crowder Consulting.

That could mean asking for additional weeks of pay or health coverage, to receive the payment in one lump sum rather than periodic payments, to get a bonus or equity payout fast-tracked, or to have a non-compete voided. Workers in the U.S. on a visa may be able to get their termination date extended so that they can look for a new job in the country.

In most cases, the worst thing a company will do is say no.

“At this point, you’re walking out of the door, so what do you care if they say no,” says Crowder. “I’m a fan of pushing and testing the water in these conversations to say, ‘Here’s what I’m looking for.'” If you don’t ask at all, you’re possibly leaving money on the table.

In some cases, severance clauses can include the stipulation that if the company hires you back within a specified period of time, your severance expires. You can ask to have that clause removed, says Darcy Eikenberg, executive coach and author of Red Cape Rescue: Save Your Career Without Leaving Your Job.

“You can argue that it’s in the employer’s benefit to hire you back if they have a role for you,” says Eikenberg. “This is especially true for longer-term employees whose severance may last longer based on their service.”

Come prepared

You’ll want to ensure you have leverage on your side: Good performance reviews, a specialized skill set, awards and accolades, et cetera, are useful to bring to the conversation, says Paul Wolfe, a human resources adviser. If your company wants you to train someone before you leave, that too is leverage.

Here’s an example of how this could play out. Say a company gives three weeks of severance for each full year worked, maxing out at 27 weeks. An employee who has been at the company for 10 years can provide an overview of their track record over the past decade and ask for that cap to be lifted so they can receive 30 weeks of severance, he says.

Another option: See if HR or an ally in your firm knows if there are any openings for a similar role in a sister or parent company. You may be able to negotiate a sparkling letter of recommendation, or even LinkedIn referrals.

“If there are key people who’ve worked with you and they may be hesitant to write a recommendation for fear of breaking company rules, ask for clear guidance that they can write the recommendation,” says Eikenberg. “And make sure you let the person know they’re cleared to help.”

You’ll also want to be clear on what the severance agreement entails. Most companies aren’t just giving employees the money and extended benefits for nothing; they want something in return. For example, how restrictive is its non-disparagement clause, if included? Make sure signing it is worth the money being offered.

Take your time

The most important thing to do once you learn about a job loss is to take a breath and not sign anything right away, says Crowder. While your emotions are running wild, there’s no reason you need to sign a severance agreement right when your employer hands it it you—that only benefits them.

Instead, ask for a day or two to review everything. Or longer: By federal law, workers over 40 get 21 days to decide whether or not to sign a severance agreement, plus another seven days to revoke it, says Peter J. Glennon, a New York employment and business litigation attorney. Other workers are given a “reasonable” time to consider.

Take that time to consult with who you need to: a trusted friend, family member, mentor, or even an employment lawyer. Creating some distance for yourself is important.

“You have every right to take a breath,” says Crowder. “You can say, ‘I’d love to take a look at this and I’m happy to come back to you tomorrow at X time.'”

When to hire an employment attorney

On that note, if you can afford to do so, you can involve an employment lawyer, Crowder says. Your employer doesn’t necessarily need to know—but a lawyer can help you determine what you’re entitled to and what to ask for. They can also review the total package to ensure everything is legally binding.

Many employment lawyers offer free initial consultations—you can present them with your case and see if there’s any room to ask for more, or to have clauses cut. Crowder says to ask around your network for a referral to a good attorney; if that doesn’t yield any names, search in your local news outlet for a lawyer in your city, she suggests.

One thing to keep in mind, says Crowder: Was your employer possibly involved in discriminatory practices? Was a specific group of workers targeted in the layoffs? That can help you make a case. An employment lawyer will know what to do and can help you craft the messaging to send to your former employer, outlining your asks.

Remember: Federal law requires employers to provide 60 days’ advance notice for mass layoffs (defined as job cuts for 500 or more employees); some states, such as New York, require longer. If your soon-to-be firm doesn’t follow the law, you’ll want to hire an attorney.

“Even though this is happening to you, it could also happen for you,” says Crowder.

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