Negotiating a severance package brings images of layoffs, difficult conversations, stress, and personal upheaval – and it can be very tempting not to think about this possible eventuality at all. However, the fact is that with a still volatile global employment market, and the career landscape changed irrevocably away from the ’job for life’ model, redundancy is a reality that many of us will face.
Whatever the circumstances, there is never an easy layoff. It is a frustrating and difficult time, frequently causing personal and professional stresses and strains which make us incapable of really thinking and planning ahead.
Taking time before the need arises to think about what a good severance package might look like for you personally, can be a good investment. Read on to learn more.
1. Get Clued Up on Local Law
Understanding the legal framework in which you and your employer are operating is crucial. The end of an employment relationship can often feel fraught and you may not feel comfortable talking to the people you have usually expected to turn to for help – such as your boss or HR team. Take time as soon as you know your situation to look up as much information as you can about severance and redundancy in your local legal framework.
In the UK, you need to familiarize yourself with the terms of statutory redundancy – which is the legal minimum compensation your employer is bound to give you – if you are covered by this law (which depends on your employment status and length of service). You can read more on the UK government website. You also need to understand more about what a compromise agreement is and how it can be formed, as this is the likely route your employer will want to follow to create a severance agreement with you.
In the US, you may need to be familiar with federal discrimination statutes, state and local laws which may affect your severance negotiation. A good starting point will be your local state website where details of employment law support and advice should be available.
Finally, get hold of the company redundancy policy if there is one, and read it cover to cover!
Wherever you are in the world, do not sign anything without having a full understanding of the meaning of the document! Ask for help, advice and more time as you need it.
2. Know Your Statutory Rights
The key thing to understand when you start to get familiar with the locally binding employment laws is the statutory rights you have. These will describe the minimum expectations of your employer – for example, in the UK, statutory redundancy calculations show the minimum package that can be offered to employees being laid off, based on their age and length of service. In the US, Federal age discrimination laws state that workers aged over 40 years should have 21 days to consider a severance package before signing, whilst many businesses may ask employees to sign a waiver of rights to sue under any local or federal law.
If you know what the minimum statutory point from which your negotiations with your employer should start, you are in a better position to work towards a severance package that suits you.
3. Know What You Can Negotiate On
Naturally, your severance package should cover a financial element based on your salary, benefits, shares or pension. A figure will usually be calculated based on a certain number of weeks’ salary for every year worked, or taking a statutory payment and enhancing it with either an additional payment or by multiplying it by a certain pre-agreed factor. You can also, however, negotiate about any medical care or company car you were entitled to, to see if you can retain these benefits beyond the point that you depart the business. This might be especially useful if you are facing a period of unemployment and therefore might not have medical cover or a car to drive to interviews.
In your thinking, don’t forget the nonfinancial elements that could go into a severance package, too – you could ask for career coaching or outplacement services to retain a company phone or computer, or even to continue using office space if you need a base to work freelance for a short while.
4. Understand Your Leverage
To get to a point of talking to your employer – either an initial conversation, or following a severance package being proposed already, it is important to understand the leverage you have. Naturally, you will be better placed to ask for more if you have a longer service and a successful history with the business, but you may also be in a position to talk constructively about how you can complete ongoing projects or even step into a new role (either an existing vacancy or a temporary one such as maternity cover).
You can also help to train others to cover your workload before you depart the business – some levers to help keep negotiations sweet without threatening to be difficult but demonstrate your ability to help the company even as you prepare to leave.
5. Decide What Really Matters
Having thought about the scope of the negotiation ahead of you, you now need to take a position – and work out what really matters to you. Identify the areas you really need to ask for more – for example, retaining medical care might be extremely important if you have ongoing treatment, or keeping a new company car to allow you to attend interviews might make your chances of securing a new job increase significantly.
As a general rule, the manager you are sitting down with will want to do the best by you and might be open to more than you think – particularly if you have longer service or an exceptional record.
Redundancy and layoffs are undoubtedly stressful events. However, people do survive them, and they are becoming more common in business today. Having a plan for a potentially abrupt end to your employment can seem like tempting fate, but it is simply good, realistic planning in an environment where many of us find ourselves negotiating a severance package at some point in our careers. Invest a little thinking time now, and perhaps you will be grateful for it sometime down the career line.