Losing a job may be stressful, and the legalese surrounding severance payouts may worsen the uncertainty. This guide to negotiating severance agreements will explain what severance pay is, what to consider when evaluating your package, and how to negotiate a reasonable agreement.
Understanding severance packages.
Some job searchers may understand how to negotiate wages and benefits when employed, but they may be unaware that they can do the same while leaving a company. Most companies give a severance agreement that outlines the financial terms under which the employee will depart the corporation. Negotiating a suitable arrangement requires determining how to behave yourself during meetings with the employer, how much money and benefits you need to sustain yourself, and whether to seek legal representation.
Negotiating this agreement can help you adapt to a new job, reduce stress, and even give you a good cash buffer. However, a monetary arrangement is not the only issue to be considered during these discussions; you should also consider continued insurance coverage, assistance in obtaining a new job, and other incentives. Companies do not want you to criticize or sue them, which gives you leverage in this discussion. They may not want you to work with or share secrets with their competitors.
Here are the critical steps to negotiating a severance package.
Understand the elements of a severance package.
Many people equate severance packages with severance compensation, although a severance package can contain a variety of components. This is advantageous for the former employee since it gives several avenues for negotiating. If your previous company is strict about how much money they can give you, you may be able to boost the value of your severance package in a variety of ways. To maximize the value of your severance package, analyze each component and determine whether any critical perks are missing.
Negotiating the severance pay.
Severance payment is normally one to two weeks per year worked; however, it can be higher. If the job loss would cause financial difficulty, address it with your (former) company. The normal practice is to request four weeks of severance pay for each year as an employee. Middle managers and executives often receive more money. Some CEOs, for example, may be compensated for more than one year.
Negotiating a severance package can be difficult, but with proper planning and awareness of your rights, you can get a fair agreement that will help you move to your next opportunity. Remember that hiring an employment lawyer is a good decision, particularly for high-value severance payouts or complex termination cases.