If you have been laid off or you suspect layoffs are around the corner, it’s important to know how you can negotiate a better severance package. Such a package can help sustain you while you look for another job. Whether you have been offered a severance package or simply want to negotiate a better exit package preemptively, here is our guide to asking for more severance:
- You can always try to negotiate more severance. Employers rarely withdraw an offer just because an employee asks for more.
- A reasonable severance package should meet your needs while you look for comparable employment.
- You should be given a reasonable amount of time to review and decide whether you want to accept a severance offer. Some laws require a minimum of 21-45 days to review a severance offer.
- Do your research before negotiating. Consider what other employees have received as severance, and consider how long you may be looking for other employment.
- Remember that you can negotiate benefits such as continued health insurance and assistance in finding a new job in addition to severance payments.
If you have been experiencing issues at work, such as discrimination, harassment, wrongful suspension or termination, or are seeking guidance about employment or severance agreements, call 972-301-2937 to get a free comprehensive assessment with our legal team.
At Jackson Spencer Law, we have many years of experience negotiating severance agreements, so we are confident that we can help employees negotiate solid severance packages.
In this blog, we will discuss what a reasonable severance package entails and how you can enhance your bargaining position. Let’s start by answering the question we are frequently asked by clients: “Is it even possible to get more severance?”
Can You Get More Severance?
The amount of severance offered is typically linked to how long you have been working for your employer. There is, however, almost always room for negotiation. Even if you are not interested in negotiating more severance, you can negotiate the details of your severance package, such as whether you are paid in installments or a lump sum. Of course, you will want to take into consideration whether a lump sum severance will push you into a higher tax bracket. If so, it may be wise to spread the payments out over time to avoid the extra taxation. However, you typically cannot receive unemployment compensation at the same time you are receiving severance payments. To maximize your recovery while unemployed, you may want to negotiate for a lump sum payment of severance and continue receiving unemployment compensation. You should always file for unemployment immediately upon termination.
What is a Reasonable Severance Package?
Reasonable severance packages vary based on the company you work for, how long you have worked for them, and your role as an employee. Upper managers and executives, for instance, usually receive a better severance package than other employees. Some executives have been known to walk out with what we will call 24 Karat Golden Parachutes, multi-million-dollar deals, or more than a year of severance pay. Ultimately, a reasonable severance package is one that meets your needs while you look for other gainful employment.
While many companies offer 1-2 weeks of severance pay for every year worked, you can ask for more. A good rule of thumb is to request 4 weeks of severance pay for each year worked. However, other benefits, like continued health insurance, may be more important to you. So, keep in mind that severance payments are not the only component of a severance package you can negotiate.Either way, know that you can (and should) take your time when reviewing or accepting a severance offer from your employer. If you are over 40, the Older Workers Benefit Protection Act (OWBPA) requires a 21-day consideration period. If you are included in a group of employees being laid off from the same company, you are to be provided 45 days to review a severance offer. Even if the OWBPA does not apply in your situation, you should not rush to sign a severance agreement without a careful review. If your employer pushes you to sign an agreement without a reasonable amount of time to review its details, this is a red flag.
Preparing for Severance Negotiation
Always come to the table prepared; know what you need and what you would like to negotiate. Reading articles like this is a good start because it is important to know your rights. Also, feel free to ask around: What have other employees been offered in their severance packages?
You may also want to speak with local recruitment and placement agencies about how long it takes experienced employees like you to find a new job. If jobseekers with a background like yours typically take 8 weeks to find a new, comparable position, consider asking for a severance that will sustain you for that time period.
While many employees do not think about severance until they hear rumors or there are mass layoffs, you can negotiate severance at any time during your employment. The best times to think about a potential severance are when you are hired and as soon as you discover layoffs or terminations are around the corner. And remember that money is not the only thing on the table for severance packages; you can negotiate health insurance benefits, assistance finding another job, and other perks associated with your role.
What You Can Bring to the Table to Enhance Your Severance Package
Understand that you actually have bargaining power when it comes to negotiating severance. Most companies offer severance in exchange for waiving your right to sue, compete with, or disclose information about your employer. Any rights you are giving up can be used as leverage to negotiate a severance that works for you.
If you believe you have been discriminated against or think you may have claims against your employer, you should consult with an employment attorney before signing any waivers. You will want to carefully weigh the rights you are giving up with your severance offer, because some offers may not be worth surrendering your legal rights.
Texas-Specific Severance Rights and Considerations
Texas follows at-will employment, which means most employers do not have to offer severance unless it is part of an employment contract, a company policy, or something you negotiate as part of your exit. When severance is offered, it is often tied to a written agreement that includes legal waivers, such as giving up the right to bring certain claims later. Even in Texas, federal rules can still shape how these agreements work.
For example, employees over 40 have a minimum time period of 21 days to review a severance agreement containing a release and a window of 7 days to change their mind after signing under the Older Workers Benefit Protection Act. Texas Workforce Commission rules can also affect how severance pay interacts with unemployment benefits, especially depending on whether payments are made in a lump sum or over time.
Understanding how these pieces fit together can help you look at a severance offer with more confidence and fewer surprises.
Jackson Spencer Attorneys Can Review and Negotiate a Better Severance
The employee rights attorneys at Jackson Spencer Law have years of experience negotiating severance packages. Whether you want an attorney to simply review a severance offer or need the assistance of an experienced negotiator, we can help. Together, we can determine if the terms of your severance package should be changed or if you could potentially increase your severance. We will also help you decide whether any waivers your employer wants you to sign are in your best interest.
We offer free comprehensive assessments, without obligation. We can often negotiate severance packages at no cost to you unless we obtain an increase over the amount you were initially offered. To schedule a free comprehensive assessment, contact us at 877-239-6274 or complete our online contact form
FAQ:
Can you negotiate a severance package, or is it final?
In most situations, a severance offer is open to discussion. Employers often present an initial package with the expectation that terms may be reviewed and adjusted, especially when the agreement includes a legal release. You can usually address the total amount, how long benefits continue, how payments are delivered, and language related to references or confidentiality. What you can likely negotiate often depends on your role, length of employment, and whether legal issues, such as discrimination and retaliation affect the employer’s exposure.
What is a reasonable amount of severance pay to ask for?
There is no single standard that applies in every case. Many employers begin with one or two weeks of pay for each year worked, then adjust based on position, seniority, and compensation level. In management or executive roles, severance may also include extended benefits, bonus treatment, the vesting of restricted stock units (RSU) or other financial terms. Employment agreements, company policies, and potential legal claims can all influence what an employer may consider appropriate.
Should you sign a severance agreement right away?
It is always best to review a severance agreement carefully before signing and is often helpful to have an experienced employment attorney review it with you. These agreements often include waivers that limit your ability to bring future legal claims related to your employment or termination. In some cases, the law requires a set review period, such as under the Older Workers Benefit Protection Act. Taking time to evaluate the terms helps you understand what rights you may be giving up and whether the agreement reflects your position and circumstances.
What can you negotiate besides money in a severance package?
Severance discussions often cover more than compensation. You may be able to request continued health coverage, professional references, a change in records from “termination” to “resignation”, adjustments to non-compete or non-disparagement provisions, or short-term access to company systems and tools. The way your role and separation are described to future employers can also have a long-term professional impact.
When should you speak with an employment lawyer about severance?
It can be helpful to consult an employment lawyer when an agreement includes broad legal waivers, when you believe your termination may involve discrimination or retaliation, or when the offer appears out of line with your role and length of service. A lawyer can review the terms, explain the legal effect of the agreement, and help you approach negotiations with a clear understanding of your options.
Does severance affect your ability to collect unemployment benefits?
Severance pay can affect when you become eligible for unemployment benefits, depending on how the payments are structured and how your state treats severance under its unemployment rules. Under Texas Workforce Commission guidelines, the way severance pay is structured can influence unemployment eligibility, which makes it important to review your agreement before submitting a claim.
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