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How to negotiate a severance package

On Behalf of | Dec 21, 2016 | Employment Contracts |

Sometimes companies have to make cutbacks in staffing, even if the employees in question have been performing well. If you’ve been notified that you’re being let go, you may be presented with a severance package in exchange for agreeing to various conditions as you exit the company.

Although you may be tempted to simply sign the agreement with your soon-to-be former boss and the company’s HR representative there right in the moment, take a step back first. By looking closely at the severance offer, you may discover you have more negotiating power than you thought. With the right information, you may be able to increase their severance package and preserve your employability in the future.

Take time to review the details

Although many positions are “at will,” meaning a company does not have to prove an employee did something wrong to let them go, federal discrimination laws require that anyone over 40 must be given 21 days to review a severance package before accepting it. In many companies, the 21-day review period is standard for everyone.

In the middle of this high-pressure moment, it is difficult to evaluate what the company is asking you to give up in exchange for whatever severance amount they are offering. Some agreements ask that you continue to positively represent the company. Others may require that you not head straight over to their biggest competitor.

The more limits the company puts on you as you try to move on with your life, the more potential ammunition you may have to ask for a larger amount of money or possibly other benefits.

Review for signs of possible discrimination

Some workplace discrimination is more subtle than others. Take time to review at your performance reviews and evaluate any promotions that have happened in your department. If those who get promoted and won’t be laid off fit one particular mold, it could mean that discrimination is at play.

Furthermore, most severance agreements contain language that says you release the company and give up the right to sue if you sign. If it turns out that you are the victim of discrimination, it can be helpful to talk to a lawyer before signing away your rights.

Present your case to stay

When it is time to let several people go, the decision on who stays and who goes may be based on raw financial numbers, or it may be a random lottery system, or it may be a cover-up to let go people in protected categories such as the older employees. It’s possible that little consideration went into the decisions on whom to let go. Therefore, if you are in the middle of a large project, your knowledge and expertise on that project could be a good negotiating tool. Having someone else take over means extra training and expense for the business.

Alternatively, look to see if other departments in the company are hiring or in need of your skills. Perhaps a lateral move is the right move at this time.

Put a lawyer on your side

Before a company figures out what to offer to employees they intend to let go, they usually spend a lot of time talking to their own attorneys and figuring out what to ask for and offer in exchange. You deserve the same consideration, and often an employment lawyer can spot opportunities for negotiation that you don’t notice when scanning a piece of paper with HR in the room. If you’ve been notified of a layoff, or suspect your name might be next in line, the right lawyer can help you properly arm yourself and make the most of the situation.


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