A negotiated severance package can be financially rewarding
Recently, the Wall Street Journal observed that, although American workers may not realize it, the odds of getting laid off “are now the lowest on record.” This statement is said to be based on data going back to the 1970s. However, employees in Wisconsin and elsewhere still have elevated fears of potentially being laid off. This fear of being terminated stems, in large part, from workplace anxieties that skyrocketed during the Great Recession and have declined only slightly.
While the odds of losing one’s job are statistically low at this time, this fact would be of cold comfort if you were suddenly terminated from a well-paying job in a company you had devoted many years to serving. According to NBC News, the ramifications of being laid off could be magnified considerably if you were a mature employee in your 50s or 60s. People in this age group often tend to have an extremely difficult time finding a comparable job.
According to the Society for Human Resource Management, many employers offer generous severance packages since they realize that this will reflect positively on the company’s overall reputation and help the company immensely in job recruitment efforts in the future. The top three factors in calculating severance payments are: (1) years of service; (2) job level or title; and (3) base salary. A good severance package should provide you with financial security while you look for a new job.
Severance payments are often highly lucrative. However, many severance agreements come with strings attached. For example, some employers may want you to sign an onerous noncompete agreement in exchange for a generous severance payment. A generous severance payment could prove to be no bargain whatsoever if the restrictions on competition impede your future business success.
Tips on negotiating
While severance packages are often generous, Business Insider magazine suggests that a severance package that has been negotiated is often the most optimal. Business Insider offers the following suggestions if you are laid off and presented with a severance agreement: First, take as much time as you need to in order to review the agreement. Never be in a hurry to sign a severance agreement. Second, place maximum effort on negotiating for the highest possible severance pay. Third, try to make sure you come away with the bonus you earned last year. Fourth, request that you receive payment for all accrued benefits such as sick days and vacation time. Fifth, ask for outplacement services to be made available to you at no charge.
Investopedia offers some additional tips on some things you may wish to negotiate for as part of your severance package. One considerable benefit that you may want to receive is to have your employer continue to pay for your health insurance coverage until you find a new job. While COBRA allows for the temporary continuation of health insurance, that coverage can be costly if you are no longer employed by the company.
In addition, negotiate to construct an agreed-upon announcement of your departure and a highly laudatory recommendation letter. Finally, it does not hurt to ask if you can keep-permanently or temporarily-various employment perks. For example, ask if you can have the laptop you have been using and whether you can continue using a company vehicle for a few more months.
Seek legal help
If you have been presented with a severance agreement, you should contact a Wisconsin attorney who is skilled in reviewing severance agreements as soon as possible.