DISCLAIMER: This post gives a general overview of employee termination and severance agreements. It is not legal advice, and I am not your attorney. If you require information or advice applied to your unique situation, please make an appointment to discuss it with an employment attorney in your jurisdiction.
Recent layoffs at tech giants like Alphabet, Amazon, and Netflix have brought the spotlight back on the often-difficult topic of severance package negotiations. As an employment attorney and mediator with over two decades of experience, I have helped employers and employees navigate this challenging terrain. Remember, it’s not easy, regardless of which side you’re on.
In this blog post, I will guide employees through the process of negotiating a larger severance package.
The Purpose of Severance Agreements
Severance pay is not mandatory in the United States, even in the employee-friendly state of New York. That surprises many employees, especially in white collar roles and industries.
The fundamental purpose of severance pay, is for employers to mitigate the risk of legal action by former employees. Employers often provide this compensation in exchange for a waiver of the employee’s rights to sue. However, not all rights can be waived, including those related to sexual harassment, workers’ compensation, or unemployment insurance benefits.
Severance Negotiations Require Leverage
In most severance negotiations, the employers have the leverage. They control whose employment is terminated and whether there is any severance pay. The situations that caused the need for layoffs were also arguably in their control. You contributed to that in some ways, too. Now is the time to reflect on the employer’s values, goals, and performance in light of your contributions and experiences. Questions you might ask yourself include:
- Did my personal values align with the employer’s stated values?
- How did I demonstrate this?
- What were the employer’s top goals?
- How did I contribute to their achievement?
- Was I consistently at work, on time, and engaged in my work?
- Did I give full effort?
- What did I achieve in this role?
- How did it contribute to the employer’s success, even under the current circumstances?
Your leverage in negotiating a higher severance package typically hinges on whether you have potential claims against your employer, such as unpaid wages, overtime, discrimination, retaliation, or whistleblower actions. However, if you can give clear examples of your contributions, you might be able to persuade the employer to offer you more pay or things of value like career coaching or health insurance extensions.
Make the Seven Choices
Before engaging in negotiations, it will benefit you to be aware of your emotional response to the employment termination. You don’t want your upsets to derail the negotiations. The Seven Choices from my book, DIY Conflict Resolution can help with that:
- Forgive yourself. Even if you weren’t the model employee and were planning to leave this job, it hurts to be let go.
- Acknowledge yourself. Look again at your responses to the questions above and your contributions.
- Forgive the world and your employer. Very few people enjoy terminating employees, and employers don’t like being in positions where they believe they have to.
- Free the emotions. Again, it hurts to be let go, even from jobs we hate. Allow yourself to feel whatever you do. If you need to go to a private place to yell, cry, or drop a series of f* bombs, do it.
- Clear your mind. Don’t attempt to negotiate when your mind is still racing through all the reasons you shouldn’t have been chosen, your employer is terrible, or your life is going to be more difficult.
- Assume nothing. Unless you are in a management position that analyzed the data supporting the layoffs and made the decision, you don’t truly know what happened or how challenging the process was.
- Listen with your third ear. It can be very difficult to show compassion when you feel devalued and rejected, but doing so will help you understand the situation better and listen for opportunities. It’s possible you and your former employer can both get a few more things you need from each other.
Determining Whether to Negotiate the Amount of Severance Pay
It rarely hurts to ask for more. You are already on your way out, so you don’t have a lot to lose. But you will want to keep a good reputation, even if you don’t currently think you will need it.
Having leverage provides an incentive for the employer to pay more. This incentive could be avoiding the costs associated with defending a legal claim, making it a win-win situation for both parties.
Regardless of whether you succeed in getting a bigger severance package, the skill of helping employers see mutual benefit will be one you can carry into your next job.
Conclusion
To negotiate a bigger severance package, employees need to:
- Understand the nuances of the negotiation process
- Leverage potential claims
- Creating incentives for employers to give more
In an environment where additional funds may not always seem readily available, creative conflict resolution becomes a powerful tool.
Not sure if you have leverage?
Employee Termination is an Emotional Experience – for Both of You