The company informed you that they have considered laying you off. However, on the sunny side, the company is also willing to offer you severance pay, and they are willing to negotiate the severance agreement with you. Here, you will need to ensure that you negotiate the terms well so that the package they are offering suits your needs. The package should be such that it outweighs the risks.
In this article, you will basically learn how to negotiate for your severance agreement. We will provide you with step-by-step details about what to do at the time of negotiation. However, before that, you will learn what a severance agreement is and what are the major constituents of a severance package. Hence, to learn more, read on through to the end of the article.
What Is A Severance Agreement?
According to Indeed.com,
“Severance agreements are legal documents that lay out the conditions of termination. Although the content of these documents varies, they usually explain the conditions that the employer and employee must meet and describe any remuneration to be provided. If you work in corporate leadership, it might be beneficial to learn more about severance agreements and how to create one.”
However, one must understand that it is not always legally binding for a company to provide severance packages. Whether it is legally binding or not depends on the employment contract, the state in which the company is located, and the rules and regulations of the company itself.
Many companies provide severance packages to employees while they are laying those employees off. These help companies to ensure that they keep goodwill with those employees. Plus, it is also better for the company’s reputation in the market.
On the other hand, it is also extremely beneficial for the employee since a lack of a job can create immense financial strain. The severance package is provided for one or two weeks or until the time when the employee gets another job. The type of severance package changes with different companies.
What Are The Components Of A Severance Agreement?
An article in the Wall Street Journal recommends –
“Although you might be overwhelmed, the most important thing to do right now is to focus on negotiating the best terms you can and to be aware of all the options available as part of a severance package. Don’t waste time passively waiting for things to happen to you. This is an opportunity to negotiate something that is fair and equitable for both you and your employer.”
Hence, as you negotiate, you will need to have a better idea of the major things that are included in the severance package. To learn in detail some of the major components of a severance agreement, check this article on the constituents of a typical severance package.
However, here, we will give you a general idea of what is included in a typical severance agreement:
1. Severance Pay
This is basically the cash benefits the company offers the employee based on the time spent by the employee in the company.
2. Payments For Paid Time-Offs
You can cash in on the paid time off, such as sick days or vacation days, on the basis of what you have accrued so far.
3. Insurance Benefits
Here, the company offers an extension to the medical and health insurance benefits for several months after the employee is laid off.
4. Outplacements And Recommendations
Some companies offer outplacement services that will help the employee get a new job. Furthermore, the company also recommends the employee and allows to use the employer as a reference.
5. Other Perks
There are other perks available for the employee as well, like the ability of the employee to keep some company equipment, use the company’s vehicle, and more.
How To Negotiate A Severance Agreement?
According to Investopedia,
“Negotiating a suitable agreement involves considering how to conduct yourself during discussions with the employer, the cash and benefits you need to survive, and whether to hire legal help. Negotiating this accord can ease your transition to a new job, relieve stress, and possibly provide a nice financial cushion.”
Here are some of the steps that you need to follow while you negotiate your severance agreement:
1. Stay Calm And Collected
It goes without saying. Whenever you are negotiating for something important and professional, you need to show the right attitude. Always remain polite and show professionalism.
2. Control The Temptation Of Signing
Always control your urge to sign the papers right away. Yes, you are about to get money. But always think about whether you are getting what you are worth. You already lost your job, and you cannot afford to lose your respect. Try to negotiate if the package is not enough.
3. The Severance Is A Deal
The severance agreement is not a sum of money you are getting as a gift from your employer. They are basically asking you to leave your job, which is worth more than the money they are offering. In case of any problems, you cannot file a lawsuit if you sign the paper. Understand that situation of “give and take.”
4. Check Your Offer Letter/ Contract
Look back to your original offer letter or contract to check for the terms of separation. Find out whether the company is sticking to the rules that they provided you. This is one of the most important information you can have.
5. Take Professional Help
If you feel like you are struggling to understand what your employers are offering you in your severance papers you can always turn to Minnesota severance agreement attorneys (or attorneys closer to you) to look over your contract and severance papers, to make sure your employers are offering a fair severance package and fight your case if they do not.
It is essential for the employee to negotiate a severance agreement properly with the employer. The agreement defines the financial terms for the employee that the company is laying off. Although severance agreements are not legally binding in all cases, companies still offer them while laying off employees as gestures of goodwill.
Make sure that you maintain a professional tone throughout the negotiation process and ensure that the company provides all the necessary aspects of the severance package. Do you have any more recommendations regarding how to negotiate a severance agreement? Share your ideas and opinions with us in the comments section below.
A passionate writer and an avid reader, Soumava is academically inclined and loves writing on topics requiring deep research. Having 3+ years of experience, Soumava also loves writing blogs in other domains, including digital marketing, business, technology, travel, and sports.