Once your employer has given you a termination notice, the chances are your tenure is over. Although there are a few exceptions, it would be difficult to save your job after being laid off. “I’ve represented probably 10,000 people who have lost their jobs,” says Wayne Outten, the founding partner and chair of Outten and Golden LLP, an employee-side law firm. “The number of people where the company reversed their decision and unfired them is extremely rare.”
Although you might be overwhelmed, the most important thing to do right now is to focus on negotiating the best terms you can and to be aware of all the options available as part of a severance package. Don’t waste time passively waiting for things to happen to you. This is an opportunity to negotiate something that is fair and equitable for both you and your employer. “Negotiating a severance package is a difficult moment in everyone’s life, but it can be an opportunity to carve out an agreement that everyone benefits from, and it can be the next step in somebody’s career,” says career coach Paolo Gallo. “It’s not necessarily a funeral.”
- Understand the components of a severance package. …
- Wait before signing paperwork. …
- Read everything carefully. …
- Get an expert opinion. …
- Understand your priorities. …
- Negotiate for more than money. …
- Decide on a reasonable request. …
- Leverage your success.
Can You Get More?
The amount of severance offered is typically linked to how long you have been working for your employer. There is, however, almost always room for negotiation. Even if you are not interested in negotiating more severance, you can negotiate the details of your severance package, such as whether you are paid in installments or a lump sum. Of course, you will want to take into consideration whether a lump sum severance will push you into a higher tax bracket. If so, it may be wise to spread the payments out over two years to avoid the extra taxation.
What is a Reasonable Severance Package?
Reasonable severance packages vary based on the company you work for, how long you have worked for them, and your role as an employee. Middle managers and executives, for instance, usually receive a better severance package than other employees. Some executives have been known to walk out with what we will call 24 Karat Golden Parachutes, multi-million-dollar deals or more than a year of severance pay. Ultimately, a reasonable severance package is one that meets your needs while you look for other gainful employment.
While many companies offer 1-2 weeks of severance pay for every year worked, you can ask for more. A good rule of thumb is to request 4 weeks of severance pay for each year worked. However, other benefits, like continued health insurance, may be more important to you. So, keep in mind that severance payments are not the only component of a severance package you can negotiate.
Either way, know that you can (and should) take your time when reviewing or accepting a severance offer from your employer. If you are over 40, the Older Workers Benefit Protection Act (OWBPA) requires a 21-day consideration period. If you are included in a group of employees being laid off from the same company, you are to be provided 45 days to review a severance offer. Even if the OWBPA does not apply in your situation, you should not rush to sign a severance agreement without a careful review. If your employer pushes you to sign an agreement without a reasonable amount of time to review its details, this is a red flag.
Always come to the table prepared; know what you need and what you would like to negotiate. Reading articles like this is a good start because it is important to know your rights. Also feel free to ask around: What have other employees been offered in their severance packages? You may also want to speak with local recruitment and placement agencies about how long it takes employees with experience similar to yours to find a new job. If jobseekers with a background like yours typically take 8 weeks to find a new, comparable position, consider asking for a severance that will sustain you for that time period.
While many employees do not think about severance until they hear rumors or there are mass layoffs, you can negotiate severance at any time during your employment. The best times to think about a potential severance are when you are hired and as soon as you discover layoffs or terminations are around the corner. And remember that money is not the only thing on the table for severance packages; you can negotiate health insurance benefits, assistance finding another job, and other perks associated with your role.
Severance Pay
The severance pay offered is typically one to two weeks for every year worked, but it can be more. If the job loss will create an economic hardship, discuss this with your (former) employer. The general practice is to try to get four weeks of severance pay for each year worked. Middle managers and executives usually receive a higher amount. Some executives, for example, may receive pay for more than a year.
If your lump-sum severance payment is considerable, it could push you into a higher tax bracket. If thats the case, you could ask that the payment be spread out over two years to reduce the tax bite.
Update since being laid off (negotiating severance, filing unemployment, interviewing again)
FAQ
What is a good severance offer?
Can you counter offer a severance package?
How do I ask for a better severance package?
- Keep cool and collected. …
- Don’t sign your severance right away. …
- Understand the give and take. …
- Ask for professional help if needed. …
- Go back to your offer letter and contract. …
- Scrutinize your own work. …
- Know what they can (and cannot) negotiate.
Should you ever negotiate severance?