Don't settle for less! Learn how to negotiate a better severance package for tech employees
When facing a layoff or leaving a job, it's important to remember that your severance package is negotiable. Just like negotiating a job offer, you have the power to negotiate your severance agreement and increase your chances of getting a better package that meets your needs. This guide will walk you through the different components of a severance package, what's negotiable, and how to use your leverage to negotiate a better package. We'll also cover the legal aspect of severance agreements, the impact of mergers and acquisitions, and how to protect yourself financially during a job loss.
A severance package is the compensation an employee receives when leaving a company. It's not always just about the money; benefits, outplacement services, and release of liabilities and claims are also included. Here's a breakdown of the different components of a severance package:
A. Salary: The general practice is to try to get four weeks of pay for each year worked. This can include base salary, bonuses, and other forms of compensation. It's important to review your employment agreement and company policies to see if you're eligible for severance pay and how it's calculated.
B. Benefits: Your severance package may include benefits such as healthcare, accelerated vesting of equity, and other financial supports. Make sure to review the details of the benefits offered and how they compare to what you're currently receiving.
C. Outplacement services: Companies may offer services to help you with your job search, such as LinkedIn Premium, career coaching, or therapy. These services can be valuable, but make sure to find out what's offered and the terms of the services.
D. Release of liabilities and claims: A severance agreement will typically ask you to release liabilities and claims you could make to sue the company, prevent you from disparaging the company, and include language around non-disclosure, non-competition, and other legal protections for the company. It's important to review these terms and understand the implications before signing.
Companies offer severance packages to protect their legal liabilities and business interests. However, companies are not required by law to offer payment to the employees they lay off. Here's a closer look at why companies offer severance:
A. Legal liabilities: A severance agreement typically includes a release of liabilities and claims, which protects the company from being sued by the employee.
B. Business interests: Companies also offer severance packages to maintain relationships and reputation with the employee. They want to ensure a smooth transition and avoid any negative impact on the company's image.
Severance agreements typically include three documents:
A. Separation Agreement: This outlines your final date, any owed paychecks, severance payments, and a benefits package. It will also ask you to release liabilities and claims you could make against the company, prevent you from disparaging the company, and include language around non-disclosure, non-competition, and other legal protections for the company. This is typically around five pages long and will have a deadline, usually around 10 days.
B. Proprietary Information and Invention Assignment Agreement: This is a longer letter defining all of the proprietary information and trade secrets you may have as a former employee. This document tries to prevent you from sharing this information or speaking to competitors or customers, and it requires you to return all company property.
C. Termination Certification: A shorter, one-page document outlining similar terms as the earlier two agreements.
It's important to review these documents carefully and understand the terms and implications before signing. If you have any questions or concerns, it's recommended to seek legal counsel to ensure that your rights are protected.
It's important to understand your leverage when negotiating a severance package. Here are a few tips to help you negotiate a better package:
A. Be prepared: Research the company's financial stability, their history of severance packages, and the typical severance package offered for your role. This will give you an idea of what to expect and what to ask for.
B. Be professional: Remain calm and professional throughout the negotiation process. Avoid making demands or ultimatums, and focus on finding a mutually beneficial solution.
C. Be flexible: Be willing to compromise on certain terms in exchange for others. For example, you may be willing to accept a lower salary in exchange for more benefits or outplacement services.
D. Be confident: Believe in your worth and the value you've brought to the company. Show that you understand your role and the market, and that you're confident in your ability to find a new job.
Severance agreements are legal binding documents, and it's important to understand the legal implications before signing. Here are a few things to keep in mind:
A. Review the terms: Make sure you understand the terms of the agreement and the implications of signing.
B. Seek legal counsel: If you're unsure of any of the terms or have any concerns, it's recommended to seek legal counsel to ensure that your rights are protected.
C. Non-compete and non-disclosure clauses: These clauses can limit your ability to find new employment or share information about the company. It's important to understand the terms of these clauses and the impact they may have on your future job prospects.
It's important to keep in mind that the severance package may not always be final. If the company experiences a merger or acquisition, the new company may not honor the previous severance package. It's important to be aware of the company's financial stability and the potential for a merger or acquisition. If this happens, it's important to be aware of the new company's severance policies and to negotiate with them if necessary.
A job loss can be a stressful and uncertain time, but there are steps you can take to protect yourself financially. Here are a few tips to keep in mind:
A. Have an emergency fund: Having a savings account specifically for emergencies can help you cover expenses during a period of unemployment.
B. Review your budget: Take a look at your expenses and see what you can cut back on to save money.
C. Consider unemployment benefits: You may be eligible for unemployment benefits, which can help you pay for expenses while you look for a new job.
D. Look for other sources of income: Consider taking on freelance or consulting work, or even starting your own business.
E. Take advantage of outplacement services: Take advantage of any outplacement services offered by your company, as they can help you with your job search and improve your chances of finding a new job quickly.
In conclusion, being laid off or leaving a job can be a difficult and uncertain time, but understanding the components of a severance package, knowing what's negotiable, and leveraging your position can help you negotiate a better package. It's also important to keep in mind the legal aspect of severance agreements, the impact of mergers and acquisitions and to protect yourself financially during a job loss. With this knowledge, you can take control of your severance package and ensure a smooth transition to your next opportunity.
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