How to Ask for a Severance Package (With FAQs)

If you have been laid off, or you suspect layoffs are around the corner, it’s important to know that you can negotiate a better severance package at any point during your employment. Such a package can help sustain you while you look for another job. Whether you have been offered a severance package or simply want to negotiate a better exit package preemptively, here is our guide to asking for more severance:

If you have been experiencing issues at work, such as discrimination, harassment, wrongful suspension or termination, or are seeking guidance about employment or severance agreements, call 972-301-2937 to get a free consultation with our legal team.

At Jackson Spencer Law, we have many years of experience negotiating severance agreements, so we are confident that we can help employees negotiate solid severance packages.

In this post, we will discuss what a reasonable severance package entails and how you can enhance your bargaining position. Let’s start by answering the question we are frequently asked by clients: “Is it even possible to get more severance?”

The amount of severance offered is typically linked to how long you have been working for your employer. There is, however, almost always room for negotiation. Even if you are not interested in negotiating more severance, you can negotiate the details of your severance package, such as whether you are paid in installments or a lump sum. Of course, you will want to take into consideration whether a lump sum severance will push you into a higher tax bracket. If so, it may be wise to spread the payments out over two years to avoid the extra taxation.

Follow these steps to ask for a severance package after you’ve received news that you’re being let go from the company you work for:
  1. Review your company’s documents. …
  2. Make note of your accomplishments. …
  3. Stay professional. …
  4. Negotiate severance during your job offer. …
  5. Agree to an exit interview.

How to Get More Severance – An Employment Lawyer Explains

What does a severance package include?

Its common for a severance package to include payment based on the years youve worked for the company and your particular job title. Your severance package may also include, or you may be able to negotiate for it to include:

What is a severance package?

A severance package is what an employer may offer to an employee in an act of goodwill when they are letting the employee go for reasons other than an employees performance or wrongdoing. Typically, the employee is being involuntarily laid off because of factors like company downsizing, mergers and acquisitions, budget cuts and the company no longer having a need for the position the employee was in.

How much severance pay do you get?

While entry-level employees may be eligible for severance pay, those in middle management or at the executive level usually receive a higher rate. Typically, severance packages include up to two weeks of pay for every year you worked at the company, although this can vary by employer.

Some employers may not even grant severance pay since they may not be required to, depending on the terms of your employment and other factors. For example, your employers policy may state that only salaried workers are eligible for severance.

Does an employer have to offer severance pay?

There is no requirement for an employer to offer severance pay to employees they are letting go. Any severance that an employer provides is a goodwill gesture to help maintain a professional relationship and let the employee know how much they were a valued part of the organization. Keep in mind that there may be instances when employers are required to extend severance pay, but its best to check with an attorney to see if your particular situation qualifies.

Some employment contracts that youd typically sign at the start of your employment with the company will provide details on severance packages should employment end in this way. If you find yourself in a situation where you did nothing wrong and your employer is laying you off, look at your original employment agreement to see if the contract states anything about a severance package. You may also want to look in the employee handbook or your original offer letter for the same details.

Should you negotiate your severance package?

Its possible to get a more lucrative severance package if you negotiate the terms of your severance, so consider negotiating. You can see if your employer will increase how much severance they pay you, change how theyll pay you from an all-cash one-time payment to regular payments or vice-versa and pay you any bonuses you have earned for your performance.

Before you negotiate, its important to know what your personal goals are so you have a better idea of what you need from your severance. The more prepared you are for any negotiations, the more successful youll likely be when speaking with your employer.

Do you have to pay taxes on severance pay?

Severance pay is usually subject to taxes, which may include federal, state and local taxes, if applicable. How much you have to pay in taxes depends on how you receive your severance pay, whether the employer pays your severance in regular payments or one lump sum.

Does accepting severance affect unemployment benefits?

Because severance pay is something you receive after you are no longer employed at your previous company, it rarely affects your unemployment coverage or benefits. However, this can vary by state, so its important to check with your states individual unemployment laws to see if accepting severance from your employer will affect the benefits youre able to receive.

Not only is it normally okay to receive both severance pay and unemployment benefits, but you can also apply for and start working in a new position while youre receiving severance pay. Unless your severance agreement includes any language about not being able to work for a competitor, you are usually free to receive pay from a new employer right away while receiving severance pay from your previous employer.

How to ask for a severance package

Follow these steps to ask for a severance package after youve received news that youre being let go from the company you work for:

1. Review your companys documents

You can typically find details of the companys policy regarding severance packages in a couple of places:

Review these documents to see if your employer makes any mention of severance, including who is eligible and how much the company will pay departing employees. You may even see that the company doesnt offer severance pay except under specific, more uncommon circumstances. Its important to be well aware of the current policy because having this information can help you have a positive and well-informed conversation with human resources.

2. Make note of your accomplishments

Just as you should prepare to ask for a severance package by researching company policy, you can also prepare by making a list of the accomplishments youve realized at the company during your employment. One of the goals of severances packages is to show the employee how much of a valued role they had at the company, so you can mention how you have helped the organization succeed and meet goals through your work.

3. Stay professional

Being let go from your position can be discouraging and unexpected. However, its important to remain professional during your transition out of the company. Maintain an upbeat attitude and pay special attention to your tone of voice and body language when youre speaking with your manager or the human resources department about your new employment status. If youre able to communicate well and express understanding at the position your employer is in, you may increase your chances of receiving the severance you ask for.

4. Negotiate severance during your job offer

Even though your current employer may be ending your employment, keep in mind that you can negotiate a severance package when you are in the offer negotiation stage of a new position youve applied for. You dont have to wait until youre being let go to ask for severance; instead, consider having this conversation with a new hiring manager before you accept a job offer. The hope is that youll never have to refer to the conversation later on, but if your employer unexpectedly eliminates your position, you can have something in writing.

5. Agree to an exit interview

An exit interview is a normal part of the process when employees leave the company for any reason. This interview provides an employer with the opportunity to learn more about how they can improve the workplace while employees can share their thoughts on company operations. Its important to be honest during your exit interview, but also tactful so you have a productive conversation with a member of the human resources team.

You may feel compelled to share any negative experiences you had and any major mistakes you feel the company is making, but refrain from doing this unless you can deliver the news in the right way. Even so, its probably best to keep any potentially hurtful comments to yourself. Instead, make sure the employer is aware of your accomplishments and how much you enjoyed your time at the company.

If you would like the opportunity to come back and work for the organization again in the future, make sure they know this too. Youll also be able to ask for a reference and hard copies of your performance reviews. One last benefit of agreeing to an exit interview is that your compliance in doing what your employer asks of you can help them feel more willing when discussing a severance package.

FAQ

How do I resign and ask for severance?

Here are some steps to follow for how to negotiate a severance package when quitting a job:
  1. Read your employee handbook. …
  2. Determine if your company has a standard severance package. …
  3. Talk to former coworkers. …
  4. Think about how you want to be paid. …
  5. Consider talking to a legal professional. …
  6. Prepare for your exit interview.

What is usually offered in a severance package?

Typical severance packages offer one to two weeks of paid salary per year worked. Continuation of insurance benefits, assistance finding another job, and other perks can be negotiated. You usually have 21 days to accept a severance agreement, and once it’s signed–seven days to change your mind.

How do I write a letter requesting severance pay?

I will continue to be a professional, and I believe we can make this a smooth transition for both our parties, but there are a few basic demands that I need you to meet: 1) I need a severance package. 2) I need benefits until I have secured other employment. 3) I need all my vacation paid out.

How much severance should I ask?

Ultimately, a reasonable severance package is one that meets your needs while you look for other gainful employment. While many companies offer 1-2 weeks of severance pay for every year worked, you can ask for more. A good rule of thumb is to request 4 weeks of severance pay for each year worked.

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