Negotiating Your Severance With A Buzz.
In today’s economy it’s important to understand that you may be out of work longer than you think. If you are offered the opportunity to secure some continuity and extended benefits to make the employment transition easier, take them. Don’t get caught up in ego, or jealousy. No one is indispensable, except for me, and jealousy in this case is simply the huge package you imagine everyone but you received. I’m not suggesting that you cave to every dotted “I” and crossed “T”, but you do need to recognize that in most cases, employers are not required to provide severance packages, are governed by years of precedent, and have run your termination through adverse impact and legal liability analysis before having pulled the trigger.
Only 3% of wrongful termination suits actually make to court, and the average time for those cases to make it that far is two years. The majority settle out of court. So let’s say you decide to litigate because you feel you were wrongfully terminated from your 100K a year job, and that you were offered a three month severance. You’ll seek to be made “whole.” Let’s say “whole” is a year or two. You’ll be hard-pressed to land another job while in litigation with your former employer as this will be a matter of public record, and it will make most prospective employers skeptical. Further, you’ll have legal fees, court costs, insurance payments, and general living expenses during this time. Do you really think that you’ll get “whole?” No way, no how, and you and your family will also absorb a lot of stress.
“Your services are no longer required.” Now, I’m used to hearing this from Linda, and have been laid off four times over the course of my career. Rejection is what you allow it to be. It can define you as a victim, survivor, or even a winner. A wise man (me) once said, “Don’t be with those that do not want to be with you.” If you are faced with termination, it can be scary and confusing, but there are a few things you can do now as you speak with your employer that may make the transition to re-employment easier for you and your family.
Here are a few tips to use in negotiating your separation:
- Seek counsel to understand your separation agreement: Your employer will offer you the time to talk to a lawyer, and or accountant before signing the release agreement. Take that time. It’s important you have a lawyer or someone you trust look over the documents to make sure you understand everything. Do not sign until you have made all requests to reduce the cycle time of the negotiating process.
- Ask for employment and salary continuation versus a lump sum severance payment: Severance usually represents the equivalent salary for a period of time. Companies often wish to pay this as a lump sum payment because there are accounting benefits for them to do so. However, staying on the payroll allows you continued employment verification, benefits continuation, etc. If you can’t convince your employer to provide salary and benefit continuation versus a lump sum payment, get your financial advisor or accountant to help you manage these funds. You did not just win the lottery, and I’ve seen many who squandered the lump sum payment.
- Request your benefits to continue through the time of the separation package: Regardless of whether you are successful in keeping yourself on the payroll, you should ask that your health and life insurance benefits be extended through the end date of your separation period equivalent to the length of time formulated in accordance to your lump sum payment. This will help reduce out-of-pocket costs and will delay COBRA from being initiated which will provide more cushion for benefits later in the process should you have not yet landed.
- Try to secure “active” employment status in the system until severance pay ends: If you are technically still on payroll, this will help with employment verification. You should also request that your rehire status be tagged “yes” when you do come off the payroll. You never know which employer, mortgager, lender might ask, and who might answer the phone. So be sure it’s noted in your former employer’s system that the company would rehire you at a later date.
- Ask for continued access to on-site services and benefits: Benefits such as company day-care, gym memberships, etc. can go far in reducing family stress, health, and well-being. Be positive when you the company, and you are more likely to get this extended for you. You won’t get what you don’t ask for.
- Ask for project and consulting work in exchange for extending separation period: Make yourself available and show that you want to stay engaged with the people within the company. This is healthy, minimizes the feelings of separation, isolation, keeps you busy, and puts money in your bank account.
Buzz Smith is SR Curmudgeon & VP Consulting Services, OPI National Outplacement and Career Transition Located in Knoxville, Tennessee. 865.531.5194.