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fourth
  How to Negotiate A
Fair Severance Package

 
 
 

If your employer’s proposed separation package is unfair, you can ask for more. You can negotiate on your own, without a lawyer. Lawyers are expensive, and your employer may resent your bringing an "outsider" into what it regards as a "family" dispute. You may not want to jeopardize a good relationship with your former employer by retaining an aggressive lawyer to engage in hostile negotiations.

You may be able to secure a better separation agreement than the standard severance package your company is offering if the circumstances of your dismissal are unusual. Employers sometimes are willing to provide a special package to an employee who’s had a long tenure, is facing a particular hardship or has legitimate complaints about the fairness or legality of the discharge.

If you’ve lost your job in a mass layoff or a legitimate downsizing, however, you’re unlikely to receive an individually tailored severance package. Additionally, if you’ve been discharged for misconduct, your bargaining power is diminished greatly.

Leverage

Why would your employer negotiate with you on severance after firing you or accepting your resignation?

  • You’re selling "a release," an end to the possibility of a legal proceeding and expense for the company.
  • You’re selling a "non-disparagement" promise not to speak ill of the company.
  • You’re promising "to go quietly." The employer benefits by avoiding possible damage to workforce morale and the time and expense of disruptive litigation.

Employees have more bargaining power than they realize. Employers are fearful of negative publicity. They don’t like disgruntled former employees contacting board members, the Internal Revenue Service, current employees and the media. They would like to end controversy and have terminated employees go away quietly.

But your bargaining power isn’t increased merely because you believe the dismissal was unfair. You’ll have to convince the employer that the injustice is gross and possibly illegal.

Where a violation of law or gross injustice may have occurred, tell your employer you’re considering legal counsel. Make it clear that if the employer is unwilling to be fair, you’ll seek legal representation. Employers prefer dealing with an employee without a lawyer. Hopefully, your employer will realize it’s better to offer a fair severance package than to undergo the aggravation, expense and uncertainty associated with protracted litigation.

Don’t threaten to report the employer to the press or government authorities if you don’t receive extra money. Extortion is a crime. In addition, don’t declare war on the employer too early. If you’re overly confrontational and hostile, the employer may become defensive and refuse to negotiate.

How To Negotiate

Negotiation is a two-way street. Ideally, both sides are satisfied with the final outcome. Focus on the needs and desires of the employer as well as your own.

A typical negotiation may begin with the company offering two months’ severance pay. Assume you’re age 48 and you’ve been replaced by a 35-year-old employee. You have no other evidence of age discrimination. You start the negotiation by asking for a year’s pay. The company makes a counteroffer of four months. Eventually you may settle for six months, because you want to get on with your life.

Negotiations are a ritual, like a dance involving many steps. There isn’t a short cut to reaching an agreement. The following guidelines can help you better manage the process.

  1. Negotiate with someone with decision-making authority. Ideally, this executive has the authority to commit to a deal and is sympathetic to you.
  2. Be patient. Don’t let the employer bully you into a quick decision. Tell the employer you need time to review any proposed agreement carefully with a lawyer, family and financial advisers.
  3. Don’t be intimidated by a deadline. Often employers will say you must sign a release by a certain date, but frequently they’ll extend the deadline. There’s always a risk your employer will pull its offer off the table. However, most will reinstate it because they want a resolution as much as you do. Some employers will refuse to increase their offer, particularly when it would set an unwanted precedent.
  4. Set a realistic goal. Don’t give the employer your bottom line during the first negotiation session. Compromise will make a "win-win" solution possible. To give yourself some room, ask for more than you expect. However, seeking an unreasonable amount could sour the negotiations.
  5. Ask questions to gain information. Seek help from friends and allies within the company. Request that you be treated at least as well as other employees in similar situations.
  6. Be persistent. If the employer says "take it or leave it," don’t give up. Keep negotiating. Show the employer you’re serious about achieving your goals.
  7. Stress the fairness of your proposal. Point out the realities of the job market and how difficult it will be to find a similar position. Guilt can be a powerful motivator.
  8. Don’t be embarrassed to discuss the economic hardships you face, harm done to your family and what you’ve lost in income, fringe benefits and retirement savings.
  9. Prepare a list of accomplishments. Remind the company of your years of faithful service and profits you’ve helped it earn.

Wayne Outten, a New York City employment lawyer, advises, "stress your past service, list your past contributions to the company, mention the gross injustice of the company’s treatment and the practices of the company and industry in similar cases."

Some employers become angry at terminated employees who ask for more than they’re offered. When pride, politics and arrogance prevent a rational review of a proposal, even the best negotiator can’t get a fair resolution. The only alternatives are to take the employer’s last offer or turn the matter over to an attorney.

Seeking Legal Advice

When you’ve been treated badly, you have little to lose by being assertive. You may be too distraught, anxious, angry and emotional to negotiate properly on your own. Many terminated employees lack the confidence, patience, objectivity, aggressiveness or experience necessary to confront successfully employer representatives who are professionals in such matters. They need expert help.

If there’s a substantial amount of money at stake and your employer is being grossly unreasonable, you should seek a lawyer to represent you, says L. Steven Platt, a Chicago attorney and president of the National Employment Lawyers Association. If your employer asks you to sign a release of all claims in exchange for severance and you believe it has violated the law, you should retain a lawyer to negotiate. "Your right to sue for violation of an employment law is an extremely valuable right and should not be bargained away lightly," Mr. Platt says.

If you choose to negotiate alone, consider using a lawyer as a behind-the-scenes adviser or coach. Seek general advice. Negotiate first by yourself. If you’re unsuccessful, ask your lawyer to step in. An attorney is skilled in negotiating and may be able to secure a better agreement.

-- Mr. Tobias is chairman and Ms. Sauter is an attorney with the nonprofit National Employee Rights Institute (NERI) in Cincinnati. They are co-authors of "Job Rights and Survival Strategies: A Handbook for Terminated Employees," which is available from NERI by calling (800) 469-7374.


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