To ease the pain of a layoff, many employers offer severance payments to employees.
There is often no legal obligation for companies to offer these parting gifts, but they serve a number of important purposes: helping companies avoid negative press and the potential wrath of thousands of outraged employees expressing their grievances online.
Another result of these exit packages if you are laid off: it may be possible to negotiate an even better termination agreement than what is initially offered.
Here’s what you need to know about these agreements, what they often contain, and which parts are easiest to negotiate.
Severance pay
It is entirely up to companies to decide how to calculate severance pay, but it is often handed out based on how long employees have been with the company. The longer your tenure, the juicier your exit package can be. For example, you may receive two to four weeks of pay per year of service.
In a recent mass layoff at Google, workers received 16 weeks’ pay, plus two weeks for each year of service. If you find that your severance pay does not match the number of years of service you have contributed to the company, you can withdraw and ask for more. Another tactic to consider is to ask for your payment all at once up front rather than having it paid out over time.
Accelerated share acquisition
Employees who are in danger of losing any unearned equity following a layoff may withdraw and ask to be “cured” in some way. You can ask the company to accelerate your vesting period so that you can redeem some or all of your shares before termination. You can also ask for a lump sum of cash equal to the total or partial value of your shares as part of your exit package.
Unused vacation/sick days
Make sure your employer has correctly calculated how many days of unused vacation or sick leave they offer in your package. If it doesn’t match your record of the number of days you’ve used, you can ask for an adjustment.
Job placement assistance
In mass layoffs, it is common for companies to provide job assistance to laid-off workers to help them get back on their feet. If your severance payment does not include this form of service, you can request it. These services can match you with specialists or coaches who can help spice up your resume and LinkedIn profile and help you find jobs in your area of interest.
Health benefits
You may have heard of COBRA, a federal program that requires companies with more than 20 employees to offer employees to extend their same health care for a specified period of time. COBRA isn’t cheap, as employers often drop their contribution to your plan, meaning you have to foot the entire bill. However, if you make it clear to your employer why you need ongoing health care, they may agree to continue paying their share of your bill for an extended period of time.
Bonus payout
You could argue that you deserve at least a partial payout of your annual target bonus, especially if you can demonstrate that you’ve met or exceeded your goals for that point in the year.
Do not sign the document until you have had sufficient time to review it
You may even want to have a lawyer review the document with you to point out any relevant clauses, especially if they try to limit your ability to speak about your experience working there or prohibit you from working at competitors.
Success is not guaranteed
Go in with realistic expectations before attempting to negotiate.
When companies go through mass layoffs, they probably won’t be as willing to offer individual employees special adjustments or exceptions to the terms of everyone else’s agreements. If you’re part of a smaller company or if you’re one of the few employees who get the boot, your chances of closing a unique deal for yourself can improve.
Mandi Woodruff-Santos is a career coach, award-winning cohost of Brown ambition and founder of the MandiMoney Makersa unique career coaching community for women of color.
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