Make sure you're not losing out with your severance package.
Imagine: You walk into your boss's office for the abruptly called meeting to see the head of human resources is the only other person there. This isn't good. In fact, they're cutting you loose and they have some documents they want you to sign, including a one-month severance package.
This isn't a time to panic. A severance package is the pay and benefits employees may be entitled to receive when they leave their jobs unwillingly. If you've been fired or laid off, there is a possibility of a severance package, which could vary in length of time, amount of pay, and benefits given.
If you receive one, take a deep breath and think about your options. Is one-month severance sufficient? If it isn't, you don't have to accept their terms. Here are 11 tips to help you think things through, and how to negotiate for the severance package that's right for you.
1. Keep cool and collected
It's easier said than done, especially as all of the consequences of this fallout start to flood your thoughts: Will you be able to find another job? How is this going to affect your family? Why are they doing this?
You may feel disappointment, fear, and maybe even a bit of rage, but you have to stay calm. Anything you say or do in a spur-of-the-moment tirade will be held against you, completely blowing any leverage you may have in negotiations. Stay calm, and remain polite and professional.
2. Don't sign your severance right away
Your next urge might be to just sign the papers, walk away, and be done with it all. But you don't want to do that. You will probably be given a window of time to sign the papers, so you don't need to do it right after they're handed to you. Take your time to read the agreement thoroughly.
3. Understand the give and take
A severance agreement isn't just a chunk of money you're getting as a parting gift. In fact, in many cases, they're asking you to give up more than what the money is worth. As soon as you sign that paper, you've signed away your right to file a lawsuit against them for discrimination if you feel you are being wrongfully terminated.
What's more, the agreement may enforce a non-compete or even block you from contacting clients or others in your industry. That can really cripple your chances of landing a new job or making valuable connections. That means you need to understand in detail what they are offering, as well as what they are asking for in return.
4. Ask for professional help if needed
Lawyers generally don't come cheap, but if you are confused by the language in your severance papers, it may be worth the investment to bring in a legal pro to go over them with you. If you don't think that you can afford an attorney, check out some good online legal resources like NOLO and Law.com to help you see if the severance is tolerable or a one-sided deal that favors the company and not you.
5. Go back to your offer letter and contract
Look back at your original offer letter for any warning signs. If you don't have a printed copy, you probably have it floating around in your email somewhere or in your company's HR portal, if they use one. Read it closely to see if it has any terms of separation. If so, is the company holding up their end of the bargain? If not, this is important information to keep in your pocket for now.
6. Scrutinize your own work
Take a hard, long, and critical look at your time with the company. Was your work at or above average? Had you been reprimanded for your work or conduct?
If you have written copies of your annual or quarterly reviews, this is a good time to look them over for leverage. Can they justify this firing, or do you possibly have a discrimination case? When taking this step, you have to be honest with yourself and err on the side of caution.
7. Know what they can (and cannot) negotiate
Not everything in a severance package is negotiable. For example, state and federal laws may come into play when it comes to insurance coverage — but you might be able to increase your ask for a lump sum to help you pay for out-of-pocket medical insurance. By understanding what is and is not controllable by your company, you can avoid looking foolish and wasting negotiation time.
8. Understand it's not just about salary
Consider other factors beyond just the dollar amount on your paycheck. Do you have accrued PTO (paid time off)? Are you due to receive a bonus soon? Think about all of the variables and do your research. In some states, employers are required to pay out accumulated vacation or sick time.
Also, as you're crunching numbers and trying to make your case, don't forget to include taxes. Depending on when you were fired or let go, whatever your income is can still be taxed if it's over a certain amount. Also, whatever severance pay you do receive can be taxed, so keep these variables in mind when negotiating.
9. Set a goal
You've taken some time and you've done your research — now it's time to negotiate. Like any other negotiation, you want to have a goal in mind. Think about the lump sum number and other stipulations you may want to see added or removed from the agreement.
10. Be realistic
Unless you believe that you have a rock-solid discrimination case against your employer, you should be looking for a fair deal — not a lottery ticket. Being realistic and backing up your negotiations with tangible information such as your offer letter, references to state law, or even statistics on severance package averages will make you and your case seem fair and reasonable.
11. Know when to hold 'em — and when to fold 'em
There are a lot of possible outcomes when you attempt to negotiate your severance. These include:
Your company won't negotiate, in which case it's in your best interest to simply accept the original offer.
You have good negotiations and come to a reasonable agreement.
You hold significant leverage and come out a clear winner.
Your company won't negotiate, and it is in your best interest to walk away from the money because you'd be giving up too much in return.
It's hard to imagine turning down a severance package, but if the concessions you'd have to make could endanger your long-term career, it might be time to walk. It's a tough pill to swallow, but it could make all the difference in the long run.
Keep your eye on the future
Losing your job is horrible; there's no way around that. If you find yourself in that dreaded moment and staring down at a severance agreement, don't think of it as a contract for a lost job, but a contract for your future.
Conduct yourself professionally and work to make it a severance that all parties can agree on. Severance can be negotiated successfully if you handle it with patience and reason. It's not about what you are leaving behind, but what lies ahead.
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