Severance and Separation Strategy for Employees

When it comes to employment severance, the majority of questions I receive aren't necessarily about the law. Employees want to talk strategy. They have questions like "What should I do first?" and "What (or how much) should I ask for?"

There a few laws and benchmarks for negotiating severance packages, and little guidance on what your goals should be. It’s no wonder employees don’t know where to start and where they should expect to finish -- let alone how to handle the negotiations that comprise the journey between. If leaving the job is inevitable, what most employees want is to manage the transition gracefully, get a new job as soon as possible, and get as much as you can from the current relationship, whether in money, positive feelings, or both. In some cases, preserving your claims and legal rights and/or protecting your rights to your work product will be your key goals.

What to Consider Before The Severance Discussion

To prepare for a severance negotiation, you need to realistically consider the new environment you may be going into – perhaps  unemployment – and what you will be taking with you. This is the beginning of your strategy. Will you have unemployment insurance benefits, help with COBRA payments or other medical insurance, recruiter assistance, a letter of reference, an estimate of the time it may take you to find a new job, the tools you’ll need to search and prepare for those interviews, and knowledge about what you might receive as future salary and benefits? For some, the future might mean relocation or retraining. For others, there may need to be a period of medical therapy and recovery before they are prepared to reenter the employment market. You need to know what your future looks like before you define your goals and try to get as much help as you can from your current employer to meet them.

How Much Severance?

Do you know what your company has paid others -- or can you find out? Past practice is a good benchmark. How long do you think it will take you to replace this job with an opportunity that presents the same total compensation? That might be an optimistic benchmark. Do you have any potential legal claims that might give you some leverage, such as a breach of contract or discrimination claim?  If so, you can treat that as a multiplier against what you could otherwise expect; exactly what your employer should pay in exchange for you to give up those claims will of course depend on how strong they are and your likelihood of winning a lawsuit. Helping you identify your leverage, target a proposed end point, and negotiate the best possible package are all things an experienced employment attorney can help with. An attorney can also review your employer's proposed severance agreement, to make sure it reflects your deal and doesn't include any terms that will come back to haunt you.

I have benchmarking surveys linked to one of my websites, but they have to be reviewed with caution. The historical practice of a Fortune 100 company based in New York, for example, has little relevance to your severance negotiation. Those surveys target a rather select group of employers.

Many employees separating from jobs think their goal is to get as much money as possible. This may be a big mistake for two reasons: First, the amount of money paid as severance is rarely large enough to eclipse your other needs (and it won't be as large once taxes are deducted). Second, most employers have negotiated scores of severance and separation packages. They won't be willing to pay more just because you ask for it, especially if you don't know your rights.

Imagine yourself as a first time buyer dealing with an experienced car salesman. Who do you think has the advantage? To improve your bargaining position before any negotiation, you should do some serious preparation and strategy development, adopt a good tactical plan, and partner with someone who knows the game. You will not get a do-over for mistakes, and there's a lot at stake.