Maximize Your Severance Package
As the economic meltdown prevails, companies are laying-off employees to cut down costs. If you feel like a deer in crosshair then start preparing yourself for the D-day. Keeping the cutbacks in mind, companies are becoming increasingly penny-pinching when it comes to severance package. Hence don’t hang your head and mourn over what you are losing, instead think beyond the loss and make sure that you get what you truly deserve before leaving the company. Negotiating a better severance package need not be a bitter experience. With confidence you can effectively use your communication skills to attain what you deserve.
Do your homework
Before you initiate a negotiation do your homework well to increase your success rate. Learn your rights. An attorney can help you assess your legal rights , however, you yourself can also do everything possible to know your stand. Locate all documents relating to your job offer such as offer letter, employee handbook, welcome package, etc. Determine the numbers of accrued but unused vacation time and your exact salary rate. Think closely if your expectations established by your employer were met or if you are discriminated against. Check if you have any grievances. Ensure that your code of conduct throughout your tenure has been nice as misbehavior and bad conduct is not appreciated anywhere. Even after hearing the decision that you are fired, don’t get mad or threaten your employer. This will ruin you chance to ask for their help in finding you a good job. Word does get around.
If at anytime during your tenure, your employer asks you to sign something which says that you will never file suit against them for money, avoid falling in such trap by reading the documents carefully before signing. If your employers do not offer you what you deserve, remind them that by doing so they are breaking law.
Know your expectation
As you prepare yourself to sign the paper, you may only see the money fading away. However, money is not the only thing at stake. Health insurance and life insurance coverage are also terminated along with termination of your service. You 401-K plan also becomes vulnerable. Hence you should ask for a severance package keeping in mind all these factors. Also, don’t fail to ask for a positive reference letter. A solid reference letter is a lifesaver which can take you a long way.
The degree of severance package depends on the designation and duration of service, size and condition of the company and the circumstances that led to the termination of employment. If you were successful in bringing in major business and resulted in company’s profit then you can argue that some of the profit to be included in your severance package. If you were given stock options in your company, then before leaving analyze them closely as these options can greatly affect your severance package. However, these areas require professional assistance.
Tips for negotiation
Negotiation is a two-way street. If you expect your employer to compromise then you should compromise too so that both sides are satisfied with the consequence. Negotiation takes time and involves many steps. There is no short-cut to agreement, however, the following tips will help you to successfully negotiate an appropriate severance package.
- Take your time: After breaking the bad news, chances are that your employer may try every possible means to make you sign a release as quickly as possible. Don’t give in to their intentions. Don’t let any deadlines pressurize you to sign something which may regret later. Also, if you are over 40 years old, then according to law you have seven days to reconsider your package. Tell your employer that you wouldn’t sign anything until you review the proposed agreement with your attorney and family hence they need to be patient. Do not negotiate when still in shock. Take your time to settle down and come to your senses.
- Always negotiate: Remember severance package is not ‘take-it-or-leave-it’. You are expected to negotiate. Your employer wants you to leave contented so that you don’t sue them. Approach it positively. Exaggerating your demands may turn the negotiation sour. Set a realistic goal. Little compromise from your end can make this a ‘win-win’ situation. Don’t be embarrassed to disclose the financial problems that you and your family will face as a result of your job loss. Guilt is a powerful motivator.
- Be calm: Ask question and gain as much information as possible. Listen carefully to understand the reason for your termination. Understand how the severance is calculated. Ask for every interaction in writing. Arrange for a follow-up meeting.
- Ask for a fair severance package: Remind the company of your years of service and the benefits they have reaped from your hard work and dedication. Make sure your accrued benefits are taken into account like, sick leaves, vacation time and pro-rated bonuses. Make sure you are not deprived of your bonus. Also keep in mind your health benefits. As in most cases COBRA allows a continued coverage of 18 months. Ensure that your severance package is as per your position and experience in the company. Focus on non-cash-value items too e.g. continuing employment as a consultant, departure date, outplacement services (to help find another job) and retirement benefits.
- Ask for referral: It is never late to ask for a good referral. Ask your employer for contacts where you can apply for job. A steady paycheck is better than a severance package.
- Get help: You may not understand most of the documents which you company send you as these documents will contain many legal jargons. Hence, it is better to seek advice of an attorney to understand these documents.
Questions and Answers
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