The Whats and Whens of Negotiating Severance

by | March 10, 2009

These days, most everyone wants to know how to negotiate severance, especially those individuals who recently joined firms and were laid off shortly afterward. Unfortunately, it is a bit late to try to negotiate severance as your boss is beginning to explain the need to reduce headcount in the organization and your role in this reduction in force, although it is possible.

Most organizations of any size have a formal severance plan included in the employee handbook or on the Inter/intranet. Usually these plans provide a specified number of weeks severance pay based on service and/or level in the organization. Severance plans also have a requirement that the employee being severed sign a statement relinquishing any rights to litigate against the employer in exchange for the severance payments. Some severance plans permit lump sum payments and some require proof of being unemployed.

When is the best time to negotiate severance? The best time is when you are negotiating your employment terms. For several years now, executives have negotiated the terms of their possible exit from an organization at the same time they are negotiating their entrance. The hiring manager is anxious to have the candidate join the organization and is willing to negotiate to secure that acceptance. With the uneasiness in the economy at this time, severance is a valid concern that potential employees at all levels should discuss with hiring managers. You are probably more secure in your current position and are gambling a bit with a new job.

Even if the firm has been generous with severance in the past, it is best to have the conversation before you become a casualty of a reduction in workforce. Furthermore, you may be able to negotiate for more severance pay than the policy typically allows. If medical insurance is an important factor to you, negotiate an extension of the company's contribution. However, do not get out of control with your requests, as you may negotiate your way out of the job offer.

If you didn't hammer out a severance agreement at the beginning of your tenure, and now find yourself are sitting in your boss' office, be aware that your position may dictate the amount of leverage you have-if you are not a senior manager or top-level executive, your ability to negotiate has probably lessened since time of your interview. However, you may still have a bit of negotiation room. A boss is usually quite uncomfortable and feeling guilty during the layoff process and may be convinced to provide additional benefits to the soon-to-be former employee. At minimum, you should request assistance in finding a new job and settle on who is to be contacted for references and what is to be said. This can be critical. If a prospective employer contacts the wrong person or area, they might receive incorrect information that could jeopardize the new employment opportunity.

Issues open for negotiation in severance situations include: job search assistance in the form of outplacement and job counseling, temporary office and administrative support services, resume preparation and mailing, free telephone service for job-search related calls, references, extended company contribution to medical coverage, and additional severance payment periods.

You should carefully think out your needs in advance, as the termination discussion is an emotional time and you may not be in the frame of mind to think this through when the time comes. Although you may be tempted to say things you could regret later, remember that all discussions should be as unemotional as the situation permits, and you should strive to maintain a professional demeanor and attitude. As a rule, you are not a participant in a reduction in force due to any action on your part. Keep in mind that you are not the first person to be laid off and probably will not be the last. This is a situation that many people will find themselves in sooner or later. There are several emotional stages you may experience and all of these are normal. However, don't let your grief or anger over losing your job overwhelm your judgement at this crucial time. Being prepared to negotiate will help you make the best of the situation.

Filed Under: Job Search


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