Should You Try to Negotiate Your Severance?

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We have all been hearing a lot about tech layoffs and mass reductions in force (RIFs). Luckily, the labor market is tight, and unemployment is low. But even with the assurance that there are a lot of opportunities out there, being pushed out of a job can be difficult and uncertain.

Leaving a job with some cushion helps separated employees bridge a gap to new employment, minimizes the stress of unemployment, and engenders good will for an employer in the position of reducing staff. Whether you have been individually terminated or impacted by a mass layoff, if you were offered severance, you may wonder whether it is worth it to negotiate.

It Is Always Worth Trying to Negotiate.

Negotiating severance when you are part of a larger reduction in force has particular challenges when compared to one-off terminations. Mass reductions are challenging because there is typically (i) a legitimate business reason for the separation; (ii) a wide mix of employees impacted from different backgrounds, ages, and other protected classes, reducing the potential for discrimination claims; and (iii) a formula by which terminations were determined.

An individual termination is typically easier to negotiate, assuming that you do not have a history of performance issues or policy violations. Being the sole employee who is getting terminated can make it feel as though you are being improperly targeted. It may even appear to be the case to others who learn of your termination. In an individual termination, more questions can be raised about protected characteristics than in a mass layoff, possibly providing you a better negotiating position.

Should You Still Try to Negotiate? Yes.

Employers offer severance to gain certainty. They look to close the loop and ensure that liability is minimized. Including a “release of all claims” clause ensures that the signatory will not later bring legal action claiming some sort of discrimination or retaliation.

If you ask for more severance, most employers will say no because they want to maintain consistency. Then will not, however, typically reduce the severance offered. They want your signature. Therefore, you have little to lose is asking for more.

For What Should You Ask?

There are many options for how to best negotiate severance. Different approaches are appropriate in different situations. For example, you could ask for (i) additional weeks or months of severance pay, (ii) a pro-rata bonus at target, (iii) a lump-sum payment for outplacement or coaching support, (iv) additional COBRA coverage or a payment in lieu thereof, (v) forward vesting or a buy-out of equity, or (vi) some other form of compensation specific to your employer. Each severance negotiation should be tailored to your employment situation and particular needs and goals.

What Is Your Leverage?

When you attempt to negotiate your package, present the ask in a non-confrontational manner that implies leverage. To do so, you must know your leverage. Even in a mass reduction, you may have been targeted because of a protected characteristic or because of a report of improper or illegal conduct. If you don’t have that type of leverage, you may have relational leverage. If you have strong relationships with influential members of the leadership team, that can be a leverage point. Whatever your leverage, plan carefully how to use it in making the ask.

How Should You Ask?

Serious negotiations are best approached directly. However, your leverage and your ask should influence the mode of your negotiation. If you are using a protected characteristic, a written request will usually be more effective. Relational negotiations work better over the phone (it’s too easy to say “no” to a friend via email).

The worst that will happen is that your employer says, “No. Take it or leave it.” In that case, take what you can, negotiate non-monetary terms, and move forward.

Or, if you really were targeted, call a lawyer.