A severance package, sometimes referred to as a “separation agreement,” is a legally binding contract that covers the financial benefits of a former employee’s departure from their employer. When an employee is laid off involuntarily and did not commit any wrongdoing that would justify their termination, companies typically provide severance benefits.
Employers use severance packages as goodwill gestures to control how an employee reacts to being laid off. An organization can prevent retaliation and preserve good working relationships by giving a once-valued employee extra pay to help them look for a new job. An employment contract that details precisely when an employer must provide severance pay can also be included in a package of severance benefits. Contact a professional to get legal advice.
Some tips on asking for a better severance package
When negotiating your severance package, keep the following in mind:
Obtain data from colleagues.
Companies frequently fire a number of workers at once, particularly during a merger or a change in management. To find out if your offer is reasonable and whether you can bargain for more, compare your severance package with what other former employees have received.
Talk about various situations.
Anything can happen when you quit your job. Find out if you will receive benefits in the event of death or disability. Verify that you will still receive your full severance payment even if you take a new job before getting it.
Target for a lump sum.
Try requesting your severance in a different format if you are unable to persuade your former employer to increase your severance pay. A lot of employers design severance packages so that the money is paid out over time in installments. Regardless of how well the business does going forward, you can make sure you receive the entire amount of your severance package by asking for a lump sum upfront.
Prepare for tax deductions.
Make sure you set aside some of your severance pay for taxes because it is taxable. The majority of employers deduct taxes from their employees’ paychecks, so after you leave their employment, you will need to modify your budget. To cover taxable income, think about negotiating for a more significant sum.
Rewrite the main ideas using your language.
Severance packages can be complicated, even with a lawyer’s assistance. They can contain a lot of technical terminology. To make sure you understand how you will negotiate, rewrite the critical components of your severance package in your own words. Using this tactic can boost your self-assurance when requesting a better severance payout.