How to negotiate your severance package after a layoff

Despite what the charts and analytics may say, if you are currently trying to navigate the job market, it is undeniably difficult… dare I say… BRUTAL!

So if you’ve been feeling like everything is an undeniable dumpster fire, you are not alone in that. It seems like every time we turn around, another company is announcing a mass layoff and a large amount of people are involuntarily tossed back into an already saturated market. 

You are talented. You have got the juice. And you will land in an even better role. Don’t forget that, and never stop telling yourself that! 

There are so many difficulties that come with a layoff. It is… for lack of a better word… a MINDF&$K. So if you’ve experienced a recent layoff, preparing for an impending layoff, or want to stay ready just in case this post is for YOU! 

Before we get into how to negotiate your severance package after a layoff, let’s first take a look at what is absolutely crucial for you to understand when you receive one in the first place.

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5 Key Elements In Your Severance Package:

Receiving a severance package after a layoff is a daunting experience. It’s crucial to thoroughly understand the details to ensure you’re getting what you deserve and to make informed decisions about your next steps. You must pay attention to these five essential aspects ⬇️

1. Severance Pay: Is the lump sum (can also be made in periodic payments) you will receive after you’ve been laid off. 

• What you need to know: Before you sign anything, verify that the amount being offered aligns with your tenure and company policy. It is best to also compare it with industry standards and your employment contract. Research is always going to be your best friend when it comes to navigating a layoff and severance package so you know exactly what is possible and what is illegal. (💡Remember: companies are always going to have their own best interests at heart – so you must look out for yourself FIRST)

2. Benefits Continuation: This section of your severance package will focus on the continuation of your health insurance and other benefits.

• What you need to know: Make sure you understand the duration of benefits coverage and any costs you might have to cover/ take over. Most severance packages will make mention of COBRA (Consolidated Omnibus Budget Reconciliation Act) options if applicable. For example after my layoff, I was given 3 months of continued benefits/ coverage, and then offered COBRA for another 12 months at a premium. 

3. Unpaid Wages and Accrued Time Off: For this section you will focus on looking at compensation for any outstanding salary, bonuses, vacation, or sick days.

• What you need to know: Ensure all accrued leave and unpaid wages are included in a lump sum payout. Cross-reference with your pay stubs and company records. They MUST match or the company must make adjustments to your package. Do NOT sign until they do. 

4. Non-Compete and Non-Disclosure Agreements: These are usually based off of documents you signed in your offer letter. Though there are new proposed laws making changes to the nature of non-competes, as of right now it is still very much up in the air. When you look at this section of your severance package it will include, clauses restricting your future employment and disclosure of confidential information.

• What you need to know: Review the duration and scope of these clauses (most will have an expiration date attached) Seek legal advice if they seem overly restrictive or if you have concerns about their implications on your future employment opportunities / prospects.

5. Outplacement Services and Reemployment Assistance: Some companies will offer services to help you find new employment, such as resume writing, career counseling, and job placement assistance.

• What you need to know: TAKE advantage of these services if offered. They can significantly ease the transition to your next job.

Now that you’re familiar with the elements of a general severance package, there are a few steps you need to take before you sign ⬇️

Steps to Take After Receiving Your Severance Package:

1. Review the Package Carefully: Most companies do add in some type of deadline as a stipulation in the package but it is still very important to take your time to read through the entire severance agreement. Highlight any unclear sections or terms you’re unsure about, so you can ask questions.

2. Seek Legal Advice: If there are several areas that seem confusing, and your employer isn’t being as transparent as you’d like, consider consulting with an employment attorney. They can provide valuable insights into whether the package is fair and legally sound.

3. Negotiate if Necessary: (steps to negotiate below) If you find any discrepancies or feel the package is insufficient, don’t hesitate to negotiate. Present your case based on your tenure, contributions, and industry standards (an employment attorney will be valuable at this point so you don’t have to negotiate it alone) 

4. Plan Your Finances: A layoff is a huge blow to most people’s confidence and an even bigger attack to their finances. Create a budget based on your severance pay and other financial resources. Factor in the duration of benefits coverage and any job search costs (this will also help you calculate a timeline for when you absolutely need to have another form of sustainable income / employment)

5. Begin Job Searching: Needless to say, severance packages are not infinite so after you’ve given yourself the grace to sit and experience your feelings, it is best to then transition into a sustainable job search. Utilize outplacement services if provided. Update your resume, LinkedIn profile, and start networking. Consider short-term freelance or contract work to bridge any employment gaps.

Let’s not forget… you do not need to accept your severance package as is! Much like your offer letter / package you have the right and the opportunity to discuss and address any thing that you’d like to see changed / updated. 

Here are some steps you can take to do so 👇

3 Steps to Negotiate Your Severance Package After a Layoff

1. Conduct Thorough Research:

• Assess Industry Standards: Gather information on typical severance packages within your industry, including average severance pay, benefits continuation, and other components. Websites like Glassdoor or industry-specific forums can be valuable resources.
• Review Company Policies: Check your employee handbook, employment contract, or any other company documentation that outlines severance policies. Knowing your company’s standard practices will give you a baseline for negotiations.
• Compile Personal Contributions: Document your achievements, tenure, and any unique contributions you’ve made to the company. This can strengthen your case for why you deserve a better package.

2. Prepare Your Case:

• Highlight Discrepancies: Identify any inconsistencies or unfair terms in your severance agreement compared to industry standards or your employment contract. Prepare clear, concise points that outline these discrepancies.
• Present Financial Needs: If applicable, explain any specific financial needs or hardships that justify a more favorable severance package. This might include health care needs, family obligations, or other financial commitments.
• Be Ready with Alternatives: Propose reasonable alternatives or adjustments to the severance package. For instance, if additional severance pay is not possible, perhaps extended health benefits or outplacement services could be negotiated.

3. Engage in Professional Dialogue:

• Set Up a Meeting: Request a formal meeting with the HR department or your manager to discuss your severance package. Ensure the setting is professional and private to facilitate a constructive conversation.
• Stay Calm and Respectful: Approach the negotiation with a calm, respectful demeanor. Clearly present your case without becoming confrontational. Use phrases like “I would like to discuss” or “I have some concerns about” to maintain a collaborative tone.
• Listen and Compromise: Be open to the company’s perspective and prepared to find a middle ground. Negotiations often involve some give and take, so be ready to compromise on certain points while standing firm on others that are most important to you.

I know receiving a severance package comes at an unbelievably stressful and emotional time where you are dealing with a plethora of feelings and transitional steps. By paying attention to these key elements and taking the necessary steps, you can make sure at the very least you end up coming out with the best possible outcome in an unfortunate situation.

If you found this post helpful don't forget to share the knowledge with a friend, family member or nosey neighbor! I am rooting for you and your growth tremendously during this tumultuous time!

Until next time,

M.