How to negotiate severance pay when you’ve been laid off
You might be getting a pink slip, but you want to make sure you’re also getting as much compensation as possible when you head out the door.
You probably know that you can negotiate your starting salary and raises when you start a job, but did you know that you can also negotiate your severance pay agreement when you leave? Granted, it's likely not going to be top of mind when you're in the thick of it, facing your boss and someone from human resources in a conference room. But it's crucial that you don't sign any paperwork until you read and understand it thoroughly. You certainly don't want to leave any money on the table.
When you hear the words no one ever wants to hear—“We have to let you go”—it's disorienting. Most often, your HR rep takes the lead in the conversation by telling you they’ve prepared a severance package. Before you grab it and run (because you just to get the heck out of there as fast as possible), it’s important to know that you have options.
“In the heat of the moment, it may be tempting to simply sign and receive a severance check, but it’s in your best interest to have a legal professional look over it before signing,” says Patrick Colvin, a New York–based strategic human resources business partner at USA Today Network.
In case you ever find yourself on the receiving end of a severance package, we asked career experts and HR professionals for some guidance on making sure you come out ahead—even when you’re being let go.
Step 1: Review your severance package carefully
“It’s important to understand that receiving severance pay typically depends on you signing an agreement,” cautions Colvin, adding that you may forfeit some rights, like the ability to work for certain employers for a specific time period or the ability to disclose the terms of the agreement or the right to sue the company for wrongful termination.
In order to decide what to negotiate for, you need to know what’s being offered, and it helps to have a professional, or at least a trusted colleague in your field, read over the agreement. As awkward as it may feel, be prepared to say, “I’d like to read this over tonight and will get it back to you soon.”
You can add, remove, or edit clauses from the document, such as adjusting the non-compete specifications. “The thing to keep in mind is that it is a ‘this’ for ‘that’ type of situation, so everything is fair game to negotiate,” says Colvin. "The company is providing ‘this’ in exchange for ‘that,’ which is your signature."
Step 2: Negotiate more than just severance pay
Employees often think the standard severance package is a one-sided deal: It’s like a parting gift that you’re handed, along with a box for your stuff (and sometimes a security escort out of the building). Learning what’s negotiable before you walk out the door can put extra cash in your pocket and take some worries off your plate as you figure out how to find your next paying gig.
You can negotiate the size of your severance check, but there are other things you should ask for that could help during your unexpected job search.
“Some of the more obvious elements to negotiate are additional cash in the form of a lump sum or extension of salary, insurance coverage, and pay for unused sick and vacation days,” says Avery Roth, founder of the New York–based career-coaching firm Change@Work.
Step 3: Lead with your accomplishments
When you get laid off, it’s typically not because you did anything wrong. Therefore, you have more bartering power than you would if you were fired for cause. The company may be eliminating positions because their margins were low, they’re reorganizing and getting rid of a department, or they’re strapped for cash because they just lost a few big clients.
Regardless of your company's stated reason, “remind them of all of your accomplishments and all of the contributions that you’ve made,” says Alexandra Dickinson, founder of the negotiation-coaching firm Ask For It. “You can always ask, but back it up with how strong your performance has been.”
By verbally making the case of what you’ve brought to the table, you’re also reminding yourself of your work performance, and this will help boost your confidence—which will always give you the edge at the negotiating table when discussing severance pay.
Step 4: Keep up the momentum with your job search
Once you’ve negotiated the severance package you want, hopefully you’ll be in a great position to start looking for something new. That extended salary, health insurance, and career coaching are all part of your path to a new job. And the sooner you start looking, the sooner you’ll be gainfully employed again. If you’re lucky, you might even have a period of double income. Need some help getting started? Join Monster for free today. As a member, you can upload five different versions of your resume—each tailored to the types of jobs that interest you. Recruiters search Monster every day looking to fill top jobs with qualified candidates just like you.
This article is not intended as a substitute for professional legal advice. Always seek the advice of an attorney regarding any legal questions you may have.