How to Negotiate a Severance Package When Leaving a Job?

Receiving a severance package is not a one-sided offer; it is a negotiable agreement. While the initial shock of a layoff can be overwhelming, understanding that you can negotiate terms beyond just the payout is crucial for your financial and professional transition. Based on common HR practices, successfully negotiating can lead to a larger lump sum, extended benefits, and valuable career support.

What is a Severance Package and Why is it Negotiable?

A severance package is a compensation and benefits package offered to an employee upon involuntary termination of employment, not including termination for cause. It is not required by the Fair Labor Standards Act (FLSA) in the United States, making it a discretionary gesture from the employer. This discretionary nature is precisely why negotiation is possible. The company is providing financial compensation and other terms in exchange for something from you, typically your signature on a legal agreement that may include a release of claims (waiving your right to sue the company) and other clauses. Patrick Colvin, a strategic human resources business partner, confirms, "The thing to keep in mind is that it is a ‘this’ for ‘that’ type of situation, so everything is fair game to negotiate."

What Should You Look For in a Severance Agreement?

Before you can negotiate, you must thoroughly review the document. Do not sign anything during the initial meeting. It is standard and acceptable to say, “I’d like to have my advisor review this and will get it back to you soon.” Key elements to scrutinize include:

• Severance Pay: The lump sum or continued salary payments, often based on years of service (e.g., one or two weeks of pay per year worked).
• Benefits Continuation: How long the company will pay for or contribute to your health, dental, and vision insurance (often through COBRA).
• Payout of Accrued Time: Compensation for unused vacation and, in some cases, sick days.
• Restrictive Covenants: Clauses like a non-compete agreement (limiting where you can work next) or a non-disparagement agreement (preventing you from speaking negatively about the company). These can significantly impact your future career and are prime targets for negotiation.

How Can You Negotiate More Than Just Cash?

While the size of the severance check is important, focusing solely on cash can mean leaving significant value on the table. Career experts like Avery Roth of Change@Work recommend negotiating for elements that support your job search:

• Extended Health Insurance: This can be more valuable than an equivalent cash amount due to high insurance costs.
• Outplacement Services: Access to a firm that provides career coaching, resume reviews, and job leads.
• A Positive Reference: Agreement on a specific, written reference or a neutral statement of your dates of employment and title from HR.
• Vesting of Equity: Accelerating the vesting of stock options or restricted stock units.

What is the Best Strategy for the Negotiation Conversation?

Approach the negotiation from a position of strength, not emotion. Since a layoff is typically not performance-related, you have leverage. Alexandra Dickinson, founder of Ask For It, advises, “Remind them of all of your accomplishments and all of the contributions that you’ve made.” By verbally outlining the value you brought to the role, you reinforce your professional worth, which can boost your confidence and justify your requests. Frame your asks as reasonable steps for a smooth transition.

Once an agreement is reached, your focus must immediately shift to your job search. The negotiated severance terms—extended salary, insurance, and career coaching—are designed to support this transition. To maximize this time, update your resume and begin networking immediately. Platforms like OK.com allow you to create a profile and get your information in front of recruiters. The key takeaways are to always review the agreement carefully, understand that all elements are negotiable, and leverage your professional accomplishments to secure the best possible terms for your next career step.