Navigating a Layoff: Tips for Negotiating Your Separation Agreement and Getting the Most from Severance (Employers Listen too!)
January layoff numbers are the worst we’ve seen in decades, which means many affected likely have not been through anything like this before. If you are faced with imminent unemployment, it can be scary and confusing, but there are a few things you can do now as you have conversations with your employer that may make the transition to re-employment easier for you. In today’s economy, it’s important to understand that you are likely to be out of work longer than you might think so whatever you can to do to try to secure some continuity and extend benefits to make the transition easier will be beneficial. Now is also the time to think about “Re” everything; Refinance, renegotiate your lease, redo your spending budget, reduce your debt, recailibrate your expectations to make it through until your next job starts.
The pervasive job-losses, deepening recession and credit crunch we are all facing today make it harder and harder for people who are living, or expecting to live, on the severance packages being offered today. Companies tend to want to provide lump sum severance payments so they can take the full accounting charge in the current quarter and move on. However, many companies recognize these are different times and may be willing to work with you to assist in the transition and provide some type of employment verification grace period while you get your life in order. If you’re an employer; it’s the right thing to do. Remember that while we call them severance or separation packages, what they are meant to be are job transition money and in this time where the transition will be longer than expected, employers can really help out just by being a little more flexible than usual. Even if we see a layoff coming – which most people don’t — it’s hard to not be taken by surprise at least a little, and having even a few extra weeks to think through all of the details can make a big difference.
Below are a few tips and “asks” you can use in negotiating your separation:
- Always take the time to seek counsel to understand separation agreement – Your employer will likely want you to sign an agreement before they extend any severance or other separation benefits. Your employer will offer you the time to talk to a lawyer before signing the release agreement. Take that time. It’s important you have a lawyer or advisor look over the document to make sure you understand everything. And, remember; don’t sign anything until you have made all requests to make the process easier, such as those below.
- Ask for employment and salary continuation versus a lump sum severance payment. Severance usually represents the equivalent salary for a period of time (for example, six weeks or six months). Companies often disperse this as a lump sum payment because there are accounting benefits. However, staying on the books gives you the benefit of time to take care of other business that may require employment verification. For example, one company I am aware of kept an employee on the books for several weeks so the employee could complete a refinance of their home. If you can’t convince your employer to provide salary continuation over a lump sum payment, then think about getting a financial advisor or bookkeeper to help you manage payments to you on the same schedule and amount that you have been used to in the past. You want to try and keep as many of the routines that you had before in place.
- Request your benefits to continue through the time of the separation package. Regardless of whether you are successful in extending employment, you should ask that your health and dental benefits be extended through the ending date of the time of your separation period. For example, if you receive 3 months severance, request your benefits be continued for at least the same 3 months. This helps to reduce out-of-pocket costs and delays COBRA from starting the 18-month clock.
- Ask to be an active employment status in company’s system until separation pay and/or period ends. If you are technically still on payroll, this will help make sure that anyone verifying employment gets a “yes they are employed here” answer. Similarly, you should request “rehire” status be “yes” when you are finally terminated. Since you never know who might ask and who might be answering the phone, be sure it’s noted in your file that the company would rehire you at a later date.
- Ask for continued access to on-site services and benefits. Perks such as company gym can go far in preserving your lifestyle and health, not to mention keeping expenses down. It never hurts to ask. If you are positive in your attitude about the company you are more likely to get this extended for you.
- Ask to be considered for project work in exchange for extending separation period. Make yourself positively available to come in and help out as needed shows you want to work with the company by helping them to help you. It can keep you busy and add compensation to your bank account.
Lastly, if you’ve been laid off, remember you are not alone. Millions of others have also been affected by the tightening economy. There is not shame in being caught in a layoff. These are unprecedented times but it’s important to always remember, you are talented and you have the strength and ability to get through to your next job.
If you have thoughts, questions or comments, I’d love to hear them.