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Know Your Bargaining Chips When Negotiating A Severance Agreement

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When negotiating a severance agreement, you obviously don't have the leverage you had when you negotiated a starting salary with the company. After all, then they wanted to hire you; now they want to lay you off. If they don't agree to give you what you ask for, you certainly can't threaten not to work for them! However, you will have three things in your favor: an element of surprise, an appeal to fairness, and a rudimentary knowledge of laws governing severance arrangements.

The element of surprise lies in the fact that most people, upon hearing that they are being laid off, are too shocked to negotiate a severance agreement. Jane Ciabattari, a contributing editor for Working Woman magazine, says, ''Some companies will offer you a severance package amounting to two weeks' salary and send you out the door fast, while you're still in shock." If you are calmly prepared and approach the subject firmly, in most cases your employer will be somewhat surprised if not downright dumbfounded. After all, the last thing they expect is a cool-headed negotiator. If you can muster the courage needed to handle the situation firmly, you will have an advantage.

The second element in your favor lies in the fact that nearly anyone, no matter how callous, would have difficulty laying off an employee, especially one who has been valuable to the organization. In fact, the person giving you the news may feel completely miserable about the prospect. If you are firm in your demands and can tactfully appeal to his or her sense of fairness, you will have an advantage. A manager with any empathy at all will find it difficult enough to tell you you're out of a job. Putting the screws to you on a severance agreement will likely be more than he or she can stomach, especially if you are calm and persistent.



The third element in your favor rests on the fact that severance agreements are covered by federal law. In other words, companies cannot be capricious in their approach to severance packages. You don't have to threaten to sue, but you can mention that you know that under federal law you are entitled to reason ably fair treatment when it comes to severance pay. The fact that you have knowledgeable in this area will likely throw a manager off guard, because most managers will be ignorant of the laws governing severance pay. If your manager is more concerned about the company's overall liability than about giving you an extra month or two, you have scored an important negotiating point.

How to Appeal

What if it doesn't work? What if you appeal to their fairness, firmly present a reasonable severance package, and discuss the issue until you're blue in the face-and the company still will not capitulate? "Two weeks is all you're getting. Period." You do have options. In fact, the law is generally on your side. However, if you mention this fact to your (now previous) employer, mention that you have an idea of what others have received, and that if they still don't see it your way, you may have to resort to other means.

If your employer is stubborn, cheap, or ignorant of the law, you may need to discuss your options with an attorney. Suing an employer should always be your last option; a well-timed letter from an attorney, however, can be all a company needs to begin to see your side of the bargain. As soon as the company begins adding up potential bills from attorneys, they'll soon realize that even doubling or tripling your severance package is a bargain in comparison.

One note: If your employer treats you fairly, don't try to use an attorney simply to wring more money out of him or her. Not only will you not have a leg to stand on under the law, you may also spend too much of your own funds chasing something that can add very little value to your current situation. Again, legal counsel should be your last recourse and should be used only when you are reasonably sure the return on your investment will justify the expense.

Get It in Writing

Depending on your situation, your employer may be purposely vague about your severance arrangement. "Because of our financial situation, we can't afford to keep you on permanently. But you just go ahead and take as much time as you need to find something new. We'll relieve you of your responsibilities so you can use your time here to find another position." Statements like these may sound comforting and reassuring, but they put your employer in control. What happens when you've been looking for three months and haven't found anything? Will your employer's patience wear thin, along with your severance pay? Regardless of your relationship with your employer, you must get everything in writing. Make a point of agreeing on every detail, put it in writing, and sign it after getting your employer to sign it.

One important note about getting it in writing: Although it may seem like a trivial detail, be sure that your written agreement includes the actual amount you will be paid and over what period. Your employer may agree to keep you "on the payroll" for several weeks or months. However, if your employer continues to have financial problems and considers across-the-board pay cuts, he or she may feel justified in cutting your severance pay as well.

Be sure your severance agreement states that your severance pay will be based on your current salary.

Finally, be sure the written agreement clearly states why you are being let go. Assuming you are not being fired for some sort of gross misconduct, make sure your employer signs a paper stating that you are being laid off for financial reasons, because of a personality conflict, or because your skills no longer fit the company's needs. Most likely no one but you will ever see this document, but the wording of your employer's reasons for letting you go can have an impact on your unemployment compensation benefits.
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