Severance packages are offered by employers when terminating employees, typically as part of a separation agreement. Contrary to common belief, severance agreements are almost always negotiable, regardless of what HR may tell you.
15 steps across 2 sections
1. Steps Process
- Do not sign immediately — You are not required to sign a severance agreement on the spot. Most agreements allow 21-45 days for review. Employees over 40 have specific protections under the Older Wo...
- Read the agreement carefully — Review every clause, especially: severance pay amount, continuation of benefits, non-compete and non-solicitation clauses, non-disparagement provisions, and the relea...
- Understand your leverage — Consider factors that strengthen your position: tenure, pending legal claims (discrimination, harassment, whistleblower), knowledge of company vulnerabilities, difficulty...
- Consult an employment attorney — Seek legal advice, especially if the severance is significant, if you have potential legal claims, or if the agreement contains restrictive clauses. Many employment...
- Determine your priorities — Before negotiating, list what matters most to you: more severance pay, extended health benefits, outplacement services, a positive reference, or the removal of restricti...
- Make your counteroffer — Present reasonable requests backed by evidence. Focus on items with the highest value to you and lowest cost to the employer.
- Negotiate the full package — Beyond cash compensation, negotiate:
- Extended health insurance (COBRA payments)
- Outplacement or career coaching services
- Accelerated vesting of stock options or RSUs
2. Key Tips
- Severance pay is almost always negotiable — the initial offer is usually the starting point, not the final offer
- Companies are sometimes more willing to negotiate when a lawyer is involved
- Make sure your requests are reasonable — it is better to receive some of what you need than to have all requests rejected
- Understand the tax implications of your severance: lump sum payments are taxed differently than salary continuation
- If your employer is conducting a mass layoff (20+ people), you have 45 days to review under OWBPA, not 21
Common Mistakes
- Signing the severance agreement immediately out of shock or pressure
- Not reading the full agreement (especially the release of claims section)
- Focusing only on the dollar amount while ignoring restrictive covenants
- Not consulting an employment attorney when the stakes are high
- Accepting a non-compete clause that limits your future employment unnecessarily
Pro Tips
- If you were terminated for reasons you believe are illegal (discrimination, r...
- Ask for a lump sum payment rather than salary continuation if you plan to sta...
- Negotiate to have the company pay your COBRA premiums for a set period rather...
- Request that the agreement include a neutral reference clause specifying what...
- If the non-compete is too broad, negotiate to narrow the geographic scope, in...