Although the economy is strong now, layoffs are still a reality in many industries. When you are hit with a layoff, your employer will probably offer you some kind of severance package to make things easier.
They are not doing this out of the goodness of their hearts. In exchange for the money and benefits on offer, they are going to ask you to sign away certain rights. For example, it is common for employers to ask you to agree not to bring any discrimination or harassment claims against them, or to add a more extensive non-compete agreement.
A layoff is an emotional blow, and you may feel unable to deal with these details. The first thing to do is to take a deep breath. Realize that you have time to respond, even if they offer the severance package in an exit interview.
Say that you would like to have your lawyer look at the package. Never sign a severance agreement the moment it is presented to you. Don’t let anyone pressure you into doing so.
Here are some other tips to help you through the process:
Be aware that the company is making an offer, not dictating the terms. You have a choice. You lose nothing by trying to negotiate. Take your time. Take the agreement home so you can review it once you have calmed down.
Your lawyer can point out the downsides of the agreement. Your employer may make it sound like the severance package is all upside for you. If it were, it would be a gift, not an offer. Find out what you are giving up along with what you will receive. Your attorney can identify legal and practical issues that can help you.
Make a counter-offer. Come up with a business case for why you should get a better deal. Don’t focus on the reasons you want a more generous package. Instead, point out what a good employee you have been.
Talk about your long tenure with the company and all the contacts you have in the industry. Show your track record of hard work and success. The company wants you to be reasonably satisfied with the layoff process, so you won’t leave with a chip on your shoulder. You do have leverage.
Ask for benefits in addition to more money. What you are doing by negotiating this agreement is protecting yourself financially until you can get a new job. One of the best ways of doing that is to negotiate for the continuation of your benefits for a period of time. For example, you could ask for your health, life and disability insurance policies be continued for three months. This could save you hundreds or thousands of dollars over continuing your health insurance through COBRA.
Watch out for non-compete clauses. It is common for employers to include non-compete clauses in severance agreements that limit your ability to work for competitors for a period of time. Depending on your industry and how strict the terms are, this could make it harder to find a job after a layoff. Your lawyer can find out if you are already subject to a non-compete agreement and help you negotiate more favorable terms in the severance agreement.
You can say no. Even though it would mean giving up a helpful infusion of cash, the terms of a proposed severance package may simply be too unfavorable. Remember that you always have the option of walking away without signing.