Lay-offs can provide a lot of instability. Take some control over the situation with our guide on how to negotiate your severance package.
What Is A Severance Package?
A severance package is a unique kind of compensation sometimes offered to employees upon an early termination or lay-off. It is not an extra paycheck according to your regular schedule, or a “random” dollar amount. Components of a typical severance package include financial compensation, benefits, and professional agreements.
Really, the severance package is a sort of agreement to not hold the company liable, in exchange for this compensation package upon your termination.
While it may sound like this is out of your control, you can still exercise a level of control over the situation.
How To Approach The Situation
Unless you hear rumors around the office, it’s hard to prepare mentally and emotionally for this situation. If you are pulled into a meeting about a lay-off…
- Take notes during your termination meeting— you’ll want to make sure you capture as much as you can from the conversation. Key thing to remember is that you should not feel pressured to sign anything during that meeting.
- Take a few days to review your package— some folks will tell you you have 21 days to review your package. That’s not necessarily true and varies company by company. At the minimum, you are entitled to a few days to review.
- Think through what your priorities are— will this pose a big financial setback? Focus in on increasing your total compensation. Are you concerned about healthcare? Focus in one negotiating an extended insurance coverage. Your severance negotiation, like any other negotiation, needs to be strategic.
- Review your employer handbook— this will give you a clearer idea of what you can realisticaly negotiate on. Some things may be off-limits or limited, based on agreements set in the employee handbook
What Can I Negotiate?
Do not feel forced to take your first offer. Instead, consider what you’d like within any of these typical severance package components:
- Severance pay— consider that the standard we see is about two to four weeks pay for every year you’ve been with the company. As a mujer, you have to remember that you’re probably already being underpaid. This is one of your chances to demand your worth. Also consider your financial needs. For example, if you do not have an emergency fund that feels comfortable, focus on negotiating the severance pay over the other components of your package.
- Insurance coverage— typically, you’ll be offered COBRA. Enrolling through COBRA, however, is pricey. A potential place for negotiation is on the extension of employer-based insurance or covering the cost of health insurance (COBRA or not).
- Company perks— did you get any tech? Did you get exclusive discounts? Any gym membership? Bring these into the conversation if they are important to you.
- Stock options— this will vary state by state. However, what you can bring into the mix is the vesting period of your stock or match (aka when a certain percentage actually becomes yours to use)
- Relationship to the company— maybe you want to stay affiliaited on external materials until you find a new job. Maybe you want to offer consulting services.
- References— this can range from the preparation of a reference lette, to takig a peek into how your transition will be framed externally.
- Job search support— if you are concerned about the timeline between jobs, consider asking your employer for some support here.
Remember, this is a negotiation process. Lay-offs can be unstabilizing; through negotiating your severance package, you can minimize the impact it has on your day-to-day.