By Pat Brown, MBA
Losing a job can be stressful, but a well-negotiated severance package can provide a crucial financial cushion while you transition to your next opportunity. Many employees don’t realize that severance offers are often negotiable—and that negotiating the right terms can significantly impact your financial stability.
Here’s how to approach severance negotiations strategically.
Step 1: Understand What’s Typically Included in a Severance Package
Before negotiating, it’s important to understand what severance packages generally include:
💰 Severance Pay – Typically calculated based on your length of service (e.g., one or two weeks of pay per year worked).
🏥 Health Benefits – Continuation of employer-sponsored health insurance, either through COBRA or employer-paid extensions.
📜 Payout for Unused PTO – Compensation for unused vacation or sick days.
📦 Outplacement Services – Career coaching, resume assistance, or job search support.
📆 Extended Employment Date – Some companies may keep you on the payroll longer to help with future job prospects.
🛑 Non-Compete or Non-Disclosure Agreements – Restrictions that could impact your ability to work elsewhere.
Understanding these elements will help you identify areas for negotiation.
Step 2: Don’t Accept the First Offer Immediately
When your employer presents a severance package, resist the urge to sign right away. Instead:
✅ Ask for Time to Review It – Politely request a few days to assess the offer.
✅ Consult an Employment Attorney (If Necessary) – If the terms seem unfair, legal advice may help.
✅ Compare to Industry Standards – Research what similar companies offer in severance.
Most companies expect some level of negotiation, so don’t be afraid to advocate for yourself.
Step 3: Identify Key Areas for Negotiation
Here are the most negotiable aspects of a severance package:
1. More Severance Pay
💡 If your company is offering one week per year worked, ask for two weeks per year or more.
💡 If layoffs were unexpected or sudden, use that as leverage for better compensation.
2. Extended Health Benefits
🩺 Health insurance costs can add up quickly. Ask for the company to cover COBRA for an extended period or negotiate a lump-sum payment to cover private insurance costs.
3. Payout for Unused PTO or Bonuses
💰 Some companies don’t automatically include accrued vacation or bonuses in severance. If you have unused PTO or expect a year-end bonus, push for those payments.
4. Removal or Modification of Non-Compete Agreements
🔒 A non-compete clause could prevent you from working in your industry for a certain period. If included, try to:
✔ Shorten the duration (e.g., reduce from 12 months to 6 months).
✔ Limit the geographical restrictions (so you can still work locally).
✔ Eliminate it altogether if it’s too restrictive.
5. Additional Perks
📌 Request outplacement services such as career counseling or resume assistance.
📌 If you were using company equipment (like a laptop or phone), ask to keep it.
📌 Negotiate a neutral reference letter or agreement that ensures HR will give a positive or neutral response to future employers.
Step 4: Approach the Negotiation Professionally
When negotiating, keep these tips in mind:
✅ Remain Professional and Courteous – This is a business discussion, not an argument.
✅ Emphasize Your Contributions – Highlight your years of service, major projects, or key successes.
✅ Leverage Market Standards – If competitors offer better severance packages, mention it.
✅ Be Willing to Compromise – Prioritize the most important aspects rather than fighting over every detail.
Many companies want to maintain goodwill with departing employees and may be more flexible than you expect.
Step 5: Get Everything in Writing
Once you’ve reached an agreement:
📝 Request a Revised Severance Agreement – Ensure all negotiated terms are included.
📝 Review It Carefully – Double-check for any restrictive clauses.
📝 Sign Only When Satisfied – Don’t rush—once signed, changes are difficult.
Final Thoughts
Negotiating your severance package is about protecting your financial future. Many companies expect employees to negotiate, so don’t hesitate to ask for better terms. Whether it’s higher pay, extended health benefits, or relaxed restrictions, a well-negotiated severance deal can make a significant difference during your job transition.
If in doubt, consult with a career coach, financial advisor, or employment attorney to ensure you’re getting the best possible deal.
Pat Brown, MBA, is a financial expert specializing in career transitions, budgeting, and unemployment strategies. His goal is to empower individuals with the financial knowledge they need to thrive during uncertain times.
