Published on:

Negotiating Severance Packages, Severance Agreements & Severance Pay: Top 10 Things You Need to Know

above-the-bar-logo-no12.jpgAs a result of the recent economic recession, layoffs and downsizing, it is increasingly more important to negotiate a fair severance agreement. In 2001, only 5% of professionals and 4% of supportive staff negotiated their severance packages whereas in 2008, 31% of professionals and 22% of administrative workers did so. A strong severance agreement can help cushion the burdens of unemployment until you find your next job. Don’t sign your severance agreement until you speak with one of our Severance Pay Agreement Attorneys. Meet Our Lead Severance Pay Attorney.


Tip No. 1 — The most important thing in any negotiation is to keep your emotions in check. Give yourself time to process what the company is offering you without being angry at the company for laying you off. By acting professional and courteous, you can be in much better to seek assistance of competent counsel and negotiate a much more lucrative agreement.

Tip No. 2
— Be wary of immediately signing any waivers or releases to claims arising out of your employment with the company. Ask yourself are there are any claims you might have against the company for workplace discrimination based on age, gender, race, sexual orientation, or retaliation. For example, did the company lay off all the higher paid employees who are older employees? Is there a potential age discrimination lawsuit? Every situation is different and depends on the facts. There are special rules for severance agreements under the Age Discrimination in Employment Act (ADEA) and the Older Workers Benefit and Protection Act (OWBPA). The release provision may be invalid if your employer did not follow the specific regulations. In the event you think you might have an employment discrimination lawsuit, do not sign the severance agreement without speaking to an attorney. With the help of a Workplace Attorney, you can figure out if you have a strong lawsuit, how much it is worth, and whether that claim is worth more than the severance package. If your claim is worth more than the severance package and you decide not to go forward, you can still use your claim as leverage to negotiate a better severance package.

Tip No. 3
— Extended health insurance is an extremely important issue that could cost you thousands of dollars if you don’t negotiate. If your former employer has more than 20 employees and offers your health insurance, except in limited circumstances, the company must offer you the opportunity to continue health insurance coverage at your expense for 18 months. Although you will have to pay for it, it may be still be cheaper than buying individual health insurance on your own and it may provide better coverage than you may find with an individual policy. As described in our prior blog post, you may also be eligible for a federal COBRA 65% subsidy of the health insurance coverage.

Tip No. 4 — Don’t rush into signing the severance agreement. An employer cannot withhold your wages if you refuse to sign the agreement. Give yourself time to analyze and understand all the terms of the agreement and consult with a competent Severance Agreement Attorney. Ask yourself – is the number of weeks of severance pay in accordance with the number of years you worked at the company? Has your earned but unused vacation, personal and sick time been paid?

Tip No. 5 — Analyze the tax consequences and unemployment benefits of whether it’s better to spread out the severance payments or take a lump sum. Clarify how and when you will be paid. If you decide on installments, think about whether the company is financially healthy. Make sure that the severance agreement states that your employer will not contest your unemployment benefits. An experienced severance agreement attorney can help you with this decision and possibly negotiate a greater severance payment.

Tip No. 6 — Ask the company to allow you to use it as a reference and ensure that you receive a good letter of recommendation.

Tip No. 7 — Be extremely cautious about signing any non-compete or non-disclosure clauses. In this job market, you do not want to place any limitations on your ability to get a job. An experienced employment attorney can help you determine what is fair and more importantly what is enforceable under the law.

Tip No. 8 — Negotiate with your strengths. Does the company want you to train somebody before you leave? Remind the company of the clients you brought and any other company secrets you might have.

Tip No. 9
— Figure out how much your stock options are worth. Does your pension mature shortly after your termination date? Will the company continue your life insurance and disability payments? Use your strengths to negotiate your benefits.

Tip No. 10 — Try to extend your date of termination to as long as you can. Ask the company if they can retain your employment status as active which will help you with any credit/loan transactions.

These are just a few of tips – Don’t sign your severance agreement until you speak with one of our Severance Pay Agreement Attorneys at (800) 893-9645.

Thank you for visiting our Blog. This blog provides general information and thoughts about various employment law issues primarily in the New York Tri-State area and occasionally in other areas. You are welcome to read the posts. However, do not construe any content on this blog as legal advice or the creation of an attorney-client relationship. Again, we provide the content only for informational purposes. You should not make decisions based information on our blog since the application of the law depends on the facts and each situation may be different. In addition, the law in most jurisdictions is different and changes constantly and we make no representations that any information on our blog has been updated. The Blog should not be used as a substitute for competent legal advice from an experienced employment law attorney in your state or jurisdiction.

Contact Information