No matter how hard you've worked or how much dedication you've shown your company, there may come a point when your employer decides to lay you off. And if that happens, there's a good chance you'll be offered a severance package to allow for a smooth departure.
Contrary to what you may have been led to believe, severance arrangements aren't just altruistic. In exchange for whatever sum of money your company offers, your employer will expect you to sign away certain rights and agree to certain terms. Therefore, it pays to negotiate the best possible severance package so that you get something in return for those concessions. Here's how.
1. Realize you don't have to take your company's first offer
The amount of severance your employer offers initially is not necessarily the amount you need to agree to. Remember that companies want employees to sign their severance agreements because it buys them a degree of protection, so you shouldn't hesitate to ask for more money if you can make a strong case for it.
2. Take your time responding
You'll frequently be presented with a severance agreement during the same meeting in which you're told of your termination. As such, you may not be in the best position to negotiate when you're reeling from the shock. Therefore, you're probably better off taking that agreement home, reviewing it once you've calmed down, and presenting your counteroffer after the fact.
3. Keep things professional
Maybe you just bought a house or are having a baby. Though those are terrible circumstances under which to get laid off, they're not your company's problem. So rather than use them as reasons for why you deserve a more generous package, stick to the business-related facts, such as your long-term tenure at the company and proven track record of hard work and success. Those are the points that will help make the case for a better payout.
4. Fight for benefits as well as money
Your goal in negotiating a severance package should be to emerge as financially unscathed as possible. But don't just focus on money alone. For example, you might ask to stay on your employer's health insurance plan for a certain period (say, three months) while you look for a new job. That could save you hundreds of dollars, if not thousands, when you consider the cost of a new plan or COBRA.
5. Don't limit your job prospects
One of the most dangerous aspects of taking part in a severance agreement is signing away your rights to work for certain companies. So if that's what your employer asks you to do, find a workaround. It's common for employers to include provisions in their severance agreements that prohibit employees from working for direct competitors for a given period of time. But if you agree to something like that, you could end up out of work for much longer than expected.
Therefore, don't hesitate to negotiate that aspect of your severance as well. Either limit those restricted companies to a handful of defined or named businesses, or limit the extent of time in which you can't accept a competitor's offer (say, three months instead of six months or a year).
Furthermore, you should aim to have your severance payment be enough to get you through whatever restricted period you're dealing with. For example, if you're prohibited from working for competitors for six months, then you should argue for six months' salary from your employer. Granted, your company may not comply, but you can use that as a negotiation tactic as well.
One final thing to remember about your severance package is that if you're not happy with the terms, you can always opt not to sign it. In doing so, you may end up losing out on an otherwise helpful payout. But depending on how restrictive that agreement is, you may be better off coping without the money. The last thing you want to do is stunt your career, and all for a little extra cash from a company that clearly wasn't loyal to you to begin with.
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