Banking

Seven tips for negotiating a better severance package

When you've just been told you're being laid off, the last thing you're probably prepared to do is negotiate your severance package. That's why, according to severance negotiation expert Maury Hanigan, you should be prepared even if you believe your job is secure.

When you've just been told you're being laid off, the last thing you're probably prepared to do is negotiate your severance package. That's why, according to severance negotiation expert Maury Hanigan, you should be prepared even if you believe your job is secure.

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Maury Hanigan, founder of Layoffcoach.com, has some good advice for today's workers: Assume you will be laid off and plan for it. Regardless of how secure you believe your job is, think through the severance package that would feel fair and appropriate for you. You never do your best thinking under duress. Here are Hanigan's tips for negotiating a better severance package:

  1. Approach it like career insurance - have it ready just in case.
  2. Signers remorse. You need time to be sure you have your best deal. Also, if you are over 40 years old, federal law requires employers to give you seven days to consider your package. Don't feel pressured.
  3. Approach the negotiation positively. Tell your employer that the package offered is good, and you would just like to add a few more things. If your demands seem overwhelming, or your attitude is contentious, your employer may not negotiate at all.
  4. Don't focus on the weeks of severance pay. The formula for severance pay is often the least negotiable item in a severance package. To increase your cash compensation, focus on pro-rated bonuses, extended termination date, or contract work.
  5. Finding a new job is top priority. Identify the resources your employer has that will help you find a new job. Information and contacts can be more valuable than cash if they help you find a new, steady paycheck.
  6. Confirm every interaction in writing. Within a few hours of each meeting or phone call, send an email confirming each agreement and listing the actions each side will complete prior to the next meeting.
  7. When you have most of what you want, fold. Employers are genuinely facing tough times and are not in a position to be overly generous. That doesn't mean you should walk away with a thin package, but this is not the environment to be greedy.

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About

Toni Bowers is Managing Editor of TechRepublic and is the award-winning blogger of the Career Management blog. She has edited newsletters, books, and web sites pertaining to software, IT career, and IT management issues.

34 comments
jeff.allen
jeff.allen

As has been said - all well and good in an ideal world etc, but that only shows that we all must consider retrenchment provisions even when (well, especially when) times are good. In Oz we have legislation that decrees 2 weeks' pay per year of service (capped at one years' pay), plus extra for those over 40 years old, plus a cash payment, plus (of course) untaken leave, untaken long service leave etc. But, we would not have any of these benefits if it had not been for employees getting together and negotiating these payments with employers, usually via a Union. Lets face it, when company tides ebb, and the bottom line doesn't look as good as it did during the "boom" years, there is a significant cost saving (and temporary profit maintenance) to be had by laying off staff. Yes, in the long run it's counterproductive, but hey, it maintains the profit - and keeps the shareholders happy! By collectively demanding better redundancy provisions, it ensures staff reductions are not the only avenue a company will explore when times get a little rough and profit growth is threatenend.

Ian Thurston
Ian Thurston

Here's another tip: pick the right employer in the first place. If you're lucky, get a job working for "eHealth" in Ontario. Apparently their dictionary defines "negotiate severance" as "sell the farm". If you're the CEO, not only can you negotiate more than 30% of your annual salary as a bonus within 4 months your hire, but when let go because of the uproar over how you're doing business, you can score a third of a million ... (http://www.cbc.ca/health/story/2009/06/08/ehealth-kramer.html) Seriously, your expectations should fall somewhere between this sweetheart deal and my experience: a million dollar lawsuit.

footprintless
footprintless

The time to negotiate a severance package is during the hiring process. When you have no leverage and no value because they've already decided to get rid of you, why would any capitalist give you one cent more than forced by law? I'm really surprised Toni could call Maury's advice "good". It's #1 on my list of "10 Worst Suggestions from TechRepublic". :-D

christopher.ramey
christopher.ramey

Thanks for the article. There have been a lot of layoffs where I work at and no one that is left feels safe or secure! And to make things worse, our workload is dwindling. Most of us feel that the company will be going under in the near future. And of course, the job market sucks, so I have had zero luck with finding another job. My question about severance packages is, do I have the legal right to not sign the agreement on the spot and to have an attorney look at it? My company is known for it's shady practices and I wouldn't be surprised if I was presented with a severance package and I asked for this, I would be strong armed into signing it right then and there or lose it.

NickNielsen
NickNielsen

I've at least got it a little better than most. I'll get a free ride home after I drop off the truck. Outside that my severance package will probably consist of "here's your hat, what's your hurry?"

mikifinaz1
mikifinaz1

To really get what you want you have to build it into the original employment contract, but most people don't think ahead. I had a lawyer help me build an employment contract that makes these inclusions and it works like a charm.

dawnmknapp
dawnmknapp

Have you ever been laid-off before? I have... and there is zero negotiation that can be done. I have no idea where you get the idea that you actually have a choice.. if you did, don't you think the company wouldn't be doing lay-offs in the first place?

bus66vw
bus66vw

Layoffs are part of the work environment. When the company I worked for started closing down, I was not caught of guard by the event. The timing did create problems for me, I was going to lose out on my vacation. Here is what you need to do. The real deal of negotiating is that you fill some need or roll the employer can not do without. In my case, my employer could not function at full capacity without my certification and finding a replacement was next to impossible. I had asked to be let go in the first wave of layoffs. No problem, my request was granted. That at least saved my vacation. I was set for a date in 90 days. During the last 2 weeks of that 90 days, I was asked to stay for another 6 months. I agreed and got the following, 2 weeks vacation, only had to work half days when not directly involved, and got another full year of severance pay. What I folded on was not getting a permanent position with the legal branch of the company that was going to be maintained.

JamesRL
JamesRL

I've been on both sides of the table during a layoff. At my first computer job, in the 80s, I was laid off and successfully negotiated with a VP for more severence. At my current employer, there are two parts to the package - the notice period, and the severence package. You don't have to accept or sign off on the severence package until the notice period ends - which for most employees is weeks. I have heard of staff negotiating, but there are limits. Employers, especially HR want to avoid complications and may be persuaded to be more generous to avoid potential legal action. But if the company is circling the drain, then all bets are off. James

nayseokevin
nayseokevin

What planet in the universe did you just arrive from? Unless you are in the high six-figure earning category, there is no way you have any negotiating power for a severance package these days. I have personally been through 8 corporate turnovers since 1994 working for financial companies in an IT capacity. The last two packages I've experienced that equate to any severance were those that complied with the WARN Act; 60 days.

wlportwashington
wlportwashington

Good ideas but not for this era. When my wife lost her job (it was offshored like so many others in the U.S.) and tried get a better package, they gave her an extra 10 minutes to clean out her desk before the guards escorted her out the door. Unless you are top level management, forget about getting and kind of package. You'll be luck to get unemployment.

john.jelks
john.jelks

Private companies in USA treat it as "at will employment" (ie: no liablity). I gave my company, Dorset Connects, 2 months notice that I was moving. MISTAKE! They terminated my employment before the end of year bonuses, without 2 weeks severance. With private companies, keep details to oneself - the only severance one will get is the time off between jobs.

Craig_B
Craig_B

Having been at my job for 23 years, I was given a choice of either take the severance package with some basic conditions or take 2 weeks pay without any conditions. I believe in most circumstances you can't really negoitate. It's best just to start planning for your future because their are even better things out there.

pradipsagdeo
pradipsagdeo

This is pure theory, not reality. Employer gave six of us who were told that our jobs have been eliminated ten minutes to clear our desks, turn in our badges and leave. Severance package, take what they are calling a severance package or not. No negotiations, period. Help finding a job! You must be kidding.

KevinAble
KevinAble

I've never been laid off and I don't understand how this would work. It would seem that the employer would have all the leverage in a layoff. What leverage does the employee have? why would the employer be willing to negotiate?

JamesRL
JamesRL

Because there are examples, mine included, where people have negotiated for a better deal. People will give you more money in some circumstances, because they feel guilty, or because its cheaper to give in than to consult a lawyer. Maybe they don't have lawsuits like this where you are, but it does happen in North America. Another example, my wife worked at a law firm and came back from maternity leave to find out they had changed the conditions of her job and everyone else in the same position. They were downsizing and decided to lay her off after a few weeks. She fought it through negotiation and argued for constructive dismissal, and that got her about double the severence. Even one of the biggest law firms in the country decided to negotiate rather than go to court. It isn't very many people who can negotiate a severence package during the hiring process. If I had tried, I know I wouldn't have been hired. It does happen with senior execs for sure, but most of us don't inhabit that world. James James

JamesRL
JamesRL

But here in Canada, we don't force anyone to sign anything immediately. In fact, we don't accept that and tell people to take it home and read it. Generally we give people a week to review it. We encourage people to talk to their financial advisor or lawyer if they wish. From a legal perspective, when you terminate someone's employment, the moments afetr they hear the news, they are still sometimes in a state of shock, and you don't want someone to sign a legal document without the time to reflect on it and review it. To do otherwise might be considered coersion and nullify what they sign. James

doogal123
doogal123

The idea of negotiating with someone who has nothing to lose (since they are cutting you loose, declared to you that they don't need you anymore) is pretty funny. You have No Leverage, you take what they offer if you want it on the way out the door. HOWEVER, seen in a posting here- Vacation is an accrued benefit, so they legally owe the pay for that amount of time to you if you have earned it. This is not an item of negotiation on your part, it is the law, period. Now, the other thing that might be seen is a lump sum for signing some 'termination agreement' which can include a non-disclosure clause (you are signing it but can't tell anyone you signed it or lose the money you are about to be given and worse) and a non-suit clause in exchange for the money. This may be seen with companies that have suffered law suits.

Dr_Zinj
Dr_Zinj

Companies that do the 10 minute escort and out the door are operating on the assumption that you will not bring litigation against them. They've either already consulted with legal experts and have arrived at a pre-made package; or they're ignorant of your rights and have never been hit with a suit. In either case, sign nothing before consulting with an employment lawyer or your state employment agency. Best to consult with your state employment agencies and see what they have to recommend. You may find that going back to the company and providing them a list of areas that they should negotiate on as you have a good chance of winning a tort against them to be to your profit. Evaluation of circumstances surrounding your termination, and work on negotiation of terms of termination is NOT dwelling on the past, and IS working toward your future. Every additional bit of compensation you gain puts your bottom line a bit higher.

bdbhn_it
bdbhn_it

I was recently laid off and had 10 minutes to pack up and get out while my Director watched. I got two weeks severance and one week of the two weeks of vacation I was due. However, after I left I called the HR manager and did manage to negotiate a one month extension of one of the perks of the Job, free cable, phone and internet, not a huge win but better than nothing. I do agree with everyone here that if you think you are going to negotiate more money I wish you luck, unless you are as one person said "a high six figures employee". I hope no one here has the opportunity to have the occasion to negotiate a severance.

davidsont
davidsont

I have never received a severance package for any layoff or notice given. I have been "downsized" twice in the past 15 years and once I was given the remaining vacation pay as my severance. I gave my 3 week notice at one employer and showed up the next morning to be escorted through the process of termination and my stuff was boxed up by my co-workers while I went through HR. I never have more than a picture or 2 but I am sue it made some employees unconfortable having to gather my stuff or look for more. My wife was permanenetly laid off on April 1st this year and received the WARN Act = 60 days severance. She is not in the IT field. SHe has been a Mediacl Audit Specialist for 18 years and somewhat like IT staff they definitely wanted to secure the non-disclosure clause. Most of the IT professionals I socialize with in my area know that severance or even kindness are extremely rare even under ammicable circumstances .. even if they are forced by economics or reductions. Today there are definitely different working conditions than ever before and I hope that someday, creating postive work environments for employees is considered extremely important.

Datacommguy
Datacommguy

Negotiation is not an option when one minute you're working at your desk and the next minute 24% of the IT staff is standing outside the main entrance with a package of paperwork in your hands. Any 'negotiation' at that point is limited to accepting the severance package or pursuing litigation since upper management decided that IT was too expensive and dictated that the highest paid (and coincidently oldest)in the group be cut.

jengels
jengels

I don't see much negotiating going on. I only see irritating your former employer. I could be wrong but I would recommend focusing on your future instead of worrying about negotiating a severance package that the company already doesn't HAVE to give you. I would have to say that this article is bordering foolish advice.

mdandrea
mdandrea

I was forced by circumstance to watch this happen to colleagues of mine. The company got security to follow the staff members around for their last ten minutes too. It was terrible. Happily, a week later I was in a position to resign in protest.

jhoughton
jhoughton

This blog post is a no brainer..... I like most of the posts that come from this TechRepublic writer or the contributor, but I mean, come on, talk about fracking obvious! It really does say anything of value here!

jhimes
jhimes

After our company was spun off & before our first round of major layoffs the top management slashed the severance packages that were basically 1 week per year of employment & some additional weeks for longer enployment. This was cut to less then a year, you get nodda. 1 - 5 years you get a week and over 5 you get 4 weeks pay. (so 4 weeks pay for my 20+ years) Also cut was the 30 day working period to a 10 day pencils down (no more work performed for the company) to let you try & find a transfer & prepair for termination. At least they do pay for some job search help for 30 days. While we were part of a different company it was decided to outsource most of the in house IT work. Those effected were given till the end of the day to accept transfer (apply) to the outsourced company or quit. So yes I would say it really depends on the company, your level & the situation if any of this could apply to any given termination situation.

gbb0330
gbb0330

really? - are you kidding?

NotSoChiGuy
NotSoChiGuy

I was getting laid off once, due to a competitor buying out the company. In order to ensure a smooth transition of the data services into the new owner's hands (read: so employees didn't start deleting things out of spite), the new company offered a pretty decent severance package: they were going to shut down operations in 6 months from the purchase (different areas would roll out sooner, such as HR and payroll..IT was last)...and for every month until that date you stayed on board and helped, you got an additional month of severance pay + what you were slated to get based on terms of service (1 month per year, max of 12). I was able to negotiate a couple of added things (got some equipment, a laptop and a training voucher) that really helped down the road. Now, if the firm is dead set on giving you the heave ho at the end of the day, I would agree that the room for negotiation is probably minimal; save for some mitigating circumstance.

brian
brian

Any accrued vacation is legally yours, no questions asked. You've already EARNED it. If they ask you to sign off on a "completion package", for example, they need you to finish a project before you go, you are required to accrue vacation time as well. Think of it this way: If you weren't being let go, would you still have vacation time available? Of course you would. Companies are required to set aside money due to the employee for vacation time and other earned income. That's why major companies will ask people to "use up" vacation, so they don't have as much guaranteed debt on the books prior to layoffs or major shifts in the company (like product sell offs to other companies - been there twice.) It's also a useful tactic to limit the total dollar value to "save" even when the company is doing well. (If the company is going to do annual raises, do they want to pay out vacation money BEFORE or AFTER the raises?) Once the raises go in, then they have to squirrel away enough money to pay vacation hours at the higher rate. If you can prove your vacation hours, and that they failed to pay them, I'd say you have a case worth talking to the HR people again and getting your copy of the employee handbook for definitions of "vacation" or "sick time" and how it is interpreted. The good news is that you are in New York, which has some of the best labor laws around. http://www.labor.state.ny.us/workerprotection/laborstandards/workprot/fringben.shtm Other info worth reading before you move forward: http://answers.yahoo.com/question/index?qid=20080705082439AAv0zse

JamesRL
JamesRL

I negotiated and got more money. I've seen others get a sweeter package. Depends on the circumstances, and the larger the "mass" of layoffs, the less likely you are to succeed. You negotiated and got benefits and that costs $$. So why say never, it worked for you. James

jason
jason

I've been in companies that have 'right sized' twice. Never as the victim... The legislated packages are a starting point and are commonly exceded - to the point that its almost expected. A friend was offered the basic package, had a legal friend of his review it and made some suggestions... He walked away with nearly double the original offer... It was a pleasant experience for him. Another firend took the more aggressive route of hiring legal representation most of his gains were offset by legal fees but he too walked away with more... You don't know if you don't ask. Top it off - often there are 'non-disclosure' and non-compete items written into severance... If that's the case - why accept a minimal package if they are attempting to place limits on what you are able to do with your knowledge? I'm not suggesting to dig up dirt and keep in in your pocket... however it's not uncommon for I.T. to have inner involvement in sensitive company dealings for which the company will attempt to protect itself... Even something as simple as knowing the detailed network diagram might be considered sensitive. In the event you must accept a minimal package - remove the sections for non-discolsure and non-compete. If a company is only offering the basics then only give the basics - walk away with no lingering commitments.

jeff.allen
jeff.allen

If it's a no brainer etc, why bother reading it? To some of us it means a whole lot! See that little red square with the white cross in it, in the top right of your screen? Click it.

nick
nick

In Australia legislation covers severance payments. The days of huge payouts are gone, with one exception, see further down. I have been made redundant twice, there is virtually no options for negotiation. First time was just before Christmas, we were able to negotiate attendance at the Christmas party. And we all behaved very admirably! Second time the writing was on the wall and I was able to negotiate advance notice by pro actively confronting my bosses. That actually isn't much of a negotiation. I have known people with key skills who were offered bonuses to stay to the bitter end. This scenario is rare. Who can negotiate severance packages? The CEO's. It is sickening seeing poor performers, finishing early walking out with multi million dollar payouts. Our latest is Sol Trujillo, former CEO of Telstra with a reputed $31 million payout after less than 4 years at the helm. http://www.news.com.au/dailytelegraph/money/story/0,26860,25510168-5015795,00.html

JPD_ITNetworkEng.
JPD_ITNetworkEng.

I am a Network Engineer who works for what is billed as one of the "premier IT outsourcing firms" for hedge funds and alternative investment funds. I was just let go on Monday 6/3 out of LEFT FIELD!!! I have emails from the clients I've serviced stating to my employers literally stating, " "myself" has done a incredible job in identifying and correcting numerous issues that could have caused signficant issues for our company. He is highly professional, courteous and goes over and above what is expected of him consitently. He is truly an asset to your company." This was a client they had had two previous engineers at and was ready to stop using our services, I saved this client and I was removed to go to another new client, I also had been given another "responsibility" when I was asked to go see the Head of IT Services. In his office, I was told that their client "XYZ" has stated that if we make another mistake on an escalation, as we utilized an Indian company that did a poor job for our after hours support escalations as we offer 24X7 support, so now pagers explicitly for this client, a primary and a secondary were procured and I was told being that I was the most responsible that I was being asked to take on this assignment, which woke me up many an evening. I held that primary pager for 3 months and never once not escalating or correcting the issue correctly, resulting in the client now once again fully satisfied and trusting of us, and once again another client I saved for this company. The last client I was at, and the reason I think I was let go was a client they took over from another outsourcing firm but inadvertantly somehow, (I cannot imagine how) mistakenly no Senior engineer ever went over the server infrastructure at the client site nor the user workstations, and the company only wanted a 1st lvl technician initially due to the price difference, and paid for one, and for six months though he did log the event ID's coming from these servers that were "SIGNIFICANT" he never escalated them or looked them up, not knowing how truly bad they were. I was sent to replace him and "IMMEDIATELY" recongnized the Event ID's 1030, 1006, 1057's, on Servers, as well and user wkstn event ID's also stating Group Policy not applied...etc, same errors and more as the servers had more then just that as well. Immediately I sounded the alarm and of course wanted to correct the problems and went through procedure to involve the senior network engineer's/architects as well and was met with no response, twice! via the emails I sent via the proper escalation channels. I followed up with management and all of a sudden it was now a priority, when I had been being made to put in literally 60 hour weeks by the time it was finished from Sr. Engineerings perspective (which was incorrect mind you), to troubleshoot, correct, research fixes, as besides the initial errors found there were underlying issues that the users wkstn's were not logging into the domain. They were truly not authenticating to the DC. I had to /force gpupdate's resulting in oab's being rebuilt on the user workstations and significant user delays and the obvious complaints. I worked in 5 months almost 60 hours a week and I commuted 2 hours + each way each day to NYC, adding 20 more hours each week totally 80 hr wks, I didnt see my family anymore, I wanted out from this client having stablized them, I felt I had put in my time but their client rep stated to my mgr. I could not be pulled they did not want anyone else. My being gone from home literally not getting home until 10pm + daily caused signficant family problems with my relationships with the wife an children, as well as the 60 (truly 80) hours including commute causing health issues, then HR inadvertantly became involed when the Head of HR walked onto the elevator at our office as I was getting out, stating OMG whats wrong, I had caught a cold as well hadn't slept well in months. I imagine they had a concern regarding the legalities and I was pulled from the site not before I am now seperated from my wife and after losing the technician they wanted, the client complained about all the additional hours logged and billed over their normal "contracted" support schedule, whereas previously they paid the additional hours as the company it seems had billed them significant time when in truth, it was their INITIAL NEGLECT in NOT upon taking over the infrastructure making sure it was sound and letting 6 additional mths pass with a jr just out of school tech and should have made some concessions to them in fixing the issues but it seems did not. But now in having to reimburse the client and asking me if I had anything on hard copy such as emails from the office mgr askign for support to back up some of their billed hours when the office mgr, she would normally when she herself left at 5-530pm knowing full well I was already there since 12:30 and over the 4 hrs they "contract for" and still normally giving me additional direction for work needing to be done that would keep me there even longer, now since my co. back was against the wall as they had been overbillingn it seems, they stated it was my responsibility to have gotten it in email requests when that was never any protocal for that previously, so they could have not had to return any of the overbilled fees. (27 hours was under contention I found out now) I went from the technician that my superervisors called to fix the owners home issues, users on the boards problems, and to fix and keep clients with issues which I not once did not come through on, to now I'm told a month later that I am being let go for being technically insufficient, and that the client sites requested that I not be sent back there. "I just had conversation via email 3 days prior with the CTO of one of them and he was stating i was one of the "only" ppl of my firm he wanted at his site. I was only offered a 2 week severance and as you stated it has numerous non disclosures statements and non-compete and is filled with leglaese and they expect when their hours I begged to be leg out of were the major contributor to my marriage failing and additional health issues, to now letting me go to cover some breach I'm sure, possibly them overbiling and getting caught and trying to make it look as it was my fault. I am still in awe as it is only 4 days but I am NOT TAKING A 2 WEEK SEVERANCE!!! I've already had my attorney look at it and he finds it quite easily something we can litigate. So thank you for your input as it give me some additional backbone that I am correct and have been victimized.

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