5 Ways to Negotiate a Better Severance Package
April 15, 2009 by MOYMJennifer
Filed under Income
Layoffs are at 25 year high, and that means it is not only is harder to find a new job but your savings and severance package has to last longer while your out looking for a new one. To get the best severance package, be prepared to negotiate as soon as you get the news. Many employees sign the first offer they are given, not realizing severance packages are negotiable. Companies create a budget for layoffs and often put aside reserve funds for unexpected issues. The reserve can be yours for the taking if you negotiate right.
Deal Directly with Your Boss
Once you get the news don’t get angry and don’t take it personally. While it is a hard pill to swallow for most of us, your company has no control over the dried up credit market or the slow down in consumer spending. They need to let employees go to survive the recession. It is normal to feel angry and panic but do it internally or vent at home; you’ll be negotiating with your boss and want to remain on his or her good side. If HR wants to hammer out the severance terms, ask for your boss or department head to be there too. You want negotiate with someone who has the direct authority to tell HR what to do after you agree to terms.
Delay Your Last Day
As soon as you get the news you may feel like throwing in the towel, packing up your office and leaving. Instead try to negotiate staying on as long as possible, you’ll need the extra paychecks and you’ll be more attractive to prospective employers. Come to the meeting with a list of projects you’re working on, a timeline for finishing up and why it is imperative to the company you stay on and finish the job in say, another 1 to 2 months.
Ask for Extended Health Benefits
Negotiate to stay on the companies’ health plan through your severance period and maybe even longer. By law, companies must offer you COBRA coverage, meaning that you can buy health insurance at group rates but the average Cobra premium costs $388 a month for individuals and $1,069 for families. Health insurance coverage is cheaper for the company than it is for you, so if you have anyone in the family undergoing expensive medical treatments, or a wife due to have a baby in 4 months bring those points up.
Vacation Pay
While the dream of taking the family to the Bahamas for the Holidays is dead for this year anyway, remember to ask your company to calcuate the dollar amount for all the fun you won’t be having on vacation this year. Your company may even allow you to accrue vacation time from one year to the next so check your accrued time and employee handbook to see if you can trade the unused vacation hours for pay.
Ask to Stay on As a Freelancer or Consultant
Your company still has projects and clients that need to be taken care of right? Instead of your company wasting time and resources training someone to take over your roll (and probably the roll of your 3 other office mates who were laid off too) make yourself available as a freelancer or consultant. You’ll still have a bit of income coming in and your company will save money by not paying your full salary and benefits.
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I was laid off this week and I was wondering how my severance package pay affects unemployment. Anyone know?
Yes. It varies by state but in most cases you will not be able to collect unemployment benefits while collecting on a severance package.
If you get a lump sum severance you must report it to the unemployment department and they will adjust your benefits accordingly.
The best thing you can do is educate yourself on your companies’ policies now! I knew layoffs where coming down the pipeline and I would eventually be on the chopping block. I spent a few evenings reading my employee handbook and reading advice like this on the web. When I got notice of being laid off I was ready to negotiate. My company agreed to cover our COBRA premiums for 6 months and paid me for vacation I did not take last year or this year.