The best time to negotiate severance agreements is during the onboarding process. Professionals hoping to assume well-compensated positions at businesses have leverage during the hiring process. The company wants their skills, experience and industry connections. They can negotiate for a reasonable severance package as part of their overall employment contract.
While it is possible to negotiate severance matters during termination discussions, the worker in that situation has less say over the outcome. Those intending to negotiate severance packages either during onboarding or as part of termination discussions may need support evaluating offers made by their employers and countering proposed terms.
The three considerations below are among the most important details to factor into severance negotiations when starting or leaving a job.
The timeline for job acquisition
The goal of severance pay is to make ends meet until a worker finds a new position elsewhere. The more specialized a professional’s career becomes, the more challenging it may be to find a similar position when leaving a job. For example, engineers with highly-specialized areas of expertise related to light or electricity might spend multiple months searching for positions that properly utilize their skills and offer comparable pay. The downtime between positions is often an important consideration when negotiating severance packages.
The need for pay and benefits
Severance packages often include lump-sum payments or structured payments that persist for a set amount of time after the termination of an employee’s position. The severance package may also include certain benefits. When employers help sponsor benefit packages to keep costs low for workers, employees may rely on the company to continue those benefits until they find a new position elsewhere. Professionals may need to negotiate terms related to the cost of insurance coverage and which types of insurance they need to maintain during their transition from one job to another.
Concessions demanded by the employer
Employment contracts often include a variety of different terms. Restrictive covenants are somewhat common. Employers may insist that workers cannot compete against them after leaving their jobs and may limit their use of the relationships that they develop while working at the company through non-solicitation agreements. Those restrictive covenants can impact the transition to a new job, making it important to factor in those concessions when deciding what types of severance pay are necessary.
Workers trying to optimize their financial stability in between jobs and ensure their protection and employment contracts may need legal guidance, and that’s okay. Negotiating favorable terms for severance packages can be a complicated process that requires outside support.
