The severance packages of the titans of industry are always news worthy. This CEO got $10,000,000 plus a house, a driver, and use of the company airplane while that Company President received a free office for life, a vacation home, and an annuity paying her $250,000 a year for life. Well, what about you? Are you entitled to severance benefits when you are fired, or separated, or down-sized?
It is important to understand there is no requirement or law which states you are entitled to future benefits when you lose your job. However, that doesn’t mean you will not be able to negotiate a severance package. Why would a company pay severance benefits if they don’t have to? Because you are selling a “release” of all claims you may have against the company. You are selling a “non-disparagement “ promise not to speak poorly of your employer. Further, your employer may have some “skeletons in the closet” which they want to keep in the closet.
The first thing you must do is make a list of issues which are important to you and your family. From a financial prospective the issues may include severance pay, earned commissions, bonuses, deferred compensation, accrued vacation/sick pay, stock options, profit sharing, and 401(K) balances.
Next you should consider insurance issues such as health, life, and dental insurance, long-term and short-term disability insurance. By law, your employer must offer you the chance to continue your health insurance under COBRA – which can be maintained for 18 to 36 months.
You should also consider company property issues. This may include use of the company car, credit cards, keys, laptop computers, and cellular phones. You should also consider what to do about customer lists and other proprietary information.
Finally, consider post-termination services such as letters of recommendation, use of company voice-mail, length and extent of outplacement services. Obviously, this is not an exhaustive list of the issues which may be involved in your situation and is merely offered as a starting point.
Where and how do you start the process?
Remember, negotiation is a two-way street and both sides have to feel satisfied with the result. Here are some considerations for your negotiations:
- Don’t be embarrassed to discuss the economic hardships to be faced by you and your family. Believe it or not…your employer has a heart.
- Prepare a list of accomplishments and remind your employer of your years of faithful service.
- Negotiate with someone who has authority to speak for the company. If your immediate boss does not have such authority don’t waste time speaking with her.
- Be patient and do not let your employer bully you into accepting the first offer or making a quick decision.
- Ask questions to gain information. Seek help from fellow employees and learn how the company dealt with other departing employees in the past.
- Make a concrete proposal…especially as it relates to severance pay. Ask for more than you expect to receive…give yourself room to negotiate.
- Stress the fairness of your proposal. Describe the realities of the current job market and how difficult it will be to find a comparable job. Guilt can be an effective motivator.
- Seek legal advice before signing any agreement. Because once you sign on the dotted line the deal is complete and finished and cannot be modified without your employer’s consent.