Negotiating Severance

You just found out your position is being made redundant. You probably have many questions about what to do next and how to handle this new situation.  With the resulting schock that this news can put you in, it can be hard to think about how to best protect yourself when negotiating things like a severance package.  Take a deep breath and a few moments to read what PSP members have to say about their experiences when they were laid off and how they handled getting severance packages.

 

From the Original Poster:

 

My position is being eliminated in a restructuring. The company gave me 6 weeks notice and is offering only 3 weeks of severance and only in the event that I don't find another job by my last day (Dec. 31). They claim that the severance is tied to my tenure at the company (1.5 years) but I know that they gave 3 months of severance to someone who had been with the company for under a year and was fired for cause about 6 months ago (they don't know I know this). This is a mid-size (250 employee) international company that went public a few months ago.

I'd love to hear any thoughts about the best way to negotiate a longer severance package and one that isn't tied to whether/when I find employment. What should I say? What is my leverage?

I can't afford to hire an employment attorney for obvious reasons, and I'm very open to people's personal experiences or thoughts.

I really need the longer serverance as it's tough to find a job this time of year and I'm the breadwinner/one with a full-time job in my family.

Thanks so much for all thoughts!

 

Answers:

 

Tip: the opening offer is just the opening of the conversation:

"I'm sorry you have to deal with this stressful situation at all, much less in the holiday season.  Unless you have serious legal claims, as an employee with short tenure, your leverage is likely limited to playing on your employer's discomfort at having to eliminate your position. The initial offer isn't particularly generous, but in a negotiation any departing worker should recognize that the opening offer is the beginning of the conversation and not hesitate to ask for more.

A worker negotiating severance should not limit his or her self when presenting all the reasons the employer should give a larger severance, including but not limted to opportunities missed over the course of employment (even if they're not specific; being off the job market for 1.5 years only to have to get back on is reallydestabilizing and burdensome), costs and difficulties of getting another job, strain on personal family finances, status as the breadwinner for the family, insurance needs, and the like.  Noting the value of your contributions to the company can help with this fairness argument. It's wise to have a good-better-best package in mind and propose something specific and more than your goal, rather than leave it open for them to come up with something. It's good to consider non-monetary pieces too, for example continued access to resources or an exit story that could help you secure new employment more quickly."

 

Tip: each situation is unique:

"For political reasons, you might not want to disclose what you know about the other severance package you mentioned, though that's something you need to evaluate. Regardless, you could allude to issues of fairness obliquely. Even if it's your misfortune to get laid off as part of a group (it's not clear from your post if it is just your position or several), it would be fair and reasonable for severance to be no less generous than that given under ordinary circumstances. The company will also benefit financially from the restructuring; it is fair for laid-off workers to share in that. That said, since the other employee was terminated for cause, s/he may have had confidential information or more basis for legal claims that would have been a pain, which perhaps provided leverage.
These are my impressions based on the situation you describe generally. I have to say that I am not providing specific legal advice, and can't do so without getting all the background information from you, but only general information about negotiating severance."

 

Tip: find other ways for your employer to compensate you.  For example, through things like COBRA:

"The advice I've heard and used is to ask for anything and everything you can think of, not only money. Can they pay your COBRA premium for the severance period, for example? Can you use your office space for job hunting during that time? I've gotten an incentuve bonus paid after being laid off by negotiating for it. They aren't offering much but they won't offer less just because you ask for more. I've never heard of severance being tied to a new job, that's crappy. IMO it is part of your earned compensation."

 

Tip: find a lawyer that accepts cases on contingency:

"Many employment lawyers may take this kind of case on on a contingency fee basis. Meaning they will not charge you until there is an award/ settlement, and then will take a percentage of the settlement."

 

Tip: ask for everything!

"I've been downsized 4 times and it's no fun.  The advice I've heard and used is to ask for anything and everything you can think of, not only money. Can they pay your COBRA premium for the severance period, for example? Can you use your office space for job hunting during that time? I've gotten an incentuve bonus paid after being laid off by negotiating for it. They aren't offering much but they won't offer less just because you ask for more. I've never heard of severance being tied to a new job, that's crappy. IMO it is part of your earned compensation.

 

Tip: find resources and remember the extras that add up:

"Is there a union of any kind? They can help.  I once negotiated a buyout: Instead of 4 months pay, plus 3 months health insurance, I ended up with 2 months pay and 6 months insurance, which ended up saving me a lot more than more money would have.
What about vacation and sick time? Is that included in their timeline here? If it's not, ask for that too. And any acrrued comp time. Check your HR paperwork on policies about payouts.
I would absolutely not sign anything tied to a future job, and I wonder if that's even legal. Is there a labor law attorney you could consult with? Even someone from a pro bono office, or the state Labor Dept. ?
If you go in to their office with a list of well-thought-out asks that show you've done your homework and aren't playing their game, especially if you can show that something they're asking isn't entirely above-board, they will likely cave quickly."

 

Tip: when negotiating, allude to the context of your situaton:

"I negotiated more severance when I was laid off in 2003.  It was a large company and they downsized a lot, but they were also hiring at the same time (which happens in large companies - there's a lot going on at once).  They offered me 3 months of severance pay, with benefits for 3 months and also outplacement.  I asked for 6 months of everything.  I was over 40 and am a woman and they had hired several young men at the time.  I didn't flat out accuse them of discrimination but noted those facts and that I had not been offered a job elsewhere in the organization.  I was advised by a friend who is a former employment lawyer (on the employer's side) to just say what I wanted, point out that they were still hiring and that I'd noticed that they were hiring young men, and then shut up.  She said that's the hardest part for women - stopping.  That if there's silence, most women will break it with "but of course I could take less..." 
They gave me 5 months of pay and benefits, but 6 months of outplacement.  It was hugely helpful to me.  I never had to pay for COBRA and the salary amounted to $20,000 more than I'd expected."

 

Tip: Try the Labor Relations Board:

"Have you tried the Labor Relations Board?  They helped me with a termination issue, pro bono."