How to Negotiate Severance
Aug. 27, 2024
Negotiating severance can be a critical moment in your career, especially if you've been laid off, terminated, or otherwise separated from your employer. Severance agreements often include financial compensation, continuation of benefits, and other terms, and negotiating them effectively can make a significant difference in your transition. If you're an employee in Georgia, there are specific legal and practical considerations to keep in mind. This guide will provide a comprehensive approach to negotiating severance.
What to Know About Severance Agreements
A severance agreement is a contract between an employer and an employee that outlines the terms of the employee's departure from the company. It typically includes severance pay, continuation of benefits, and other terms that may offer financial and professional support during the transition period.
Understand Common Components
Severance Pay: A lump sum or structured payments based on your tenure and salary
Health Benefits: Extension of health insurance or a lump sum to cover COBRA premiums
Non-Compete and Non-Disclosure Agreements: Clauses that restrict your future employment and confidentiality
Release of Claims: A waiver of your right to sue the company for employment-related claims
Outplacement Services: Assistance with finding new employment
Know Your Rights and Georgia Law
Georgia is an "at-will" employment state, meaning employers can terminate employees for almost any reason, as long as it's not discriminatory or in violation of a contract. This generally means you don't have an automatic right to severance pay unless specified by your contract or company policy.
Review your employment contract to see if it includes a severance clause or provisions related to termination. Some companies have specific severance policies outlined in their employee handbook or internal documents.
Understand Legal Protections
Be aware of federal regulations such as the Worker Adjustment and Retraining Notification (WARN) Act, which requires certain employers to provide advance notice of mass layoffs or plant closings. Make sure that your severance offer doesn't involve any discriminatory practices.
Prepare for Negotiation
Document Your Contributions: Prepare a comprehensive list of your achievements, contributions, and any exceptional performance metrics. This documentation can be useful in demonstrating your value to the company and justifying a higher severance package.
Evaluate Your Financial Needs
Assess your financial situation to determine how much severance pay you need. Consider factors such as:
Living Expenses: Rent, utilities, groceries, and other regular expenses
Healthcare Costs: Continuation of health insurance or COBRA premiums
Research Industry Standards
Find out what is typical in your industry for severance packages. This information can help you gauge whether the offer you receive is competitive and what you might reasonably request.
Understand Tax Implications
Severance pay is generally considered taxable income. Consult with a tax professional to understand the implications of accepting a severance package and plan accordingly.
Initiate the Negotiation Process
When you receive a severance offer, review it thoroughly. Pay attention to all terms and conditions, and make sure you understand everything before responding. If any part of the severance offer is unclear, ask for clarification. Key points to clarify might include:
Payment Structure: Is the severance pay offered as a lump sum or in installments?
Benefit Continuation: What will happen to your health insurance, retirement benefits, or other perks?
Non-Compete Clauses: Are there any restrictions on your future employment?
If the initial offer doesn't meet your expectations or needs, prepare a counteroffer. Be specific about what you want to change and provide a rationale for your requests. Common points to negotiate might include:
Higher severance pay based on your tenure, contributions, and financial needs
Extended benefits, like longer continuation of health insurance
Outplacement services
Maintain a professional demeanor throughout the negotiation process. Your goal is to reach a mutually acceptable agreement, not to create conflict.
Seek Legal Advice
Employment attorneys have specialized knowledge of severance agreements and can help you understand difficult legal terms and conditions. They can clarify:
Severance Pay Structure: Whether it’s a lump sum or periodic payments and how it affects your financial situation
Benefit Continuation: How health insurance, retirement benefits, and other perks are handled
Legal Clauses: Implications of non-compete, non-solicitation, or confidentiality clauses
An employment attorney can also compare your severance offer to industry standards and previous cases, helping you understand whether the offer is reasonable. They can advise you on market norms and fair compensation. With their expertise, an employment attorney can provide guidance on what's fair and achievable, helping you craft a counteroffer that reflects your needs and the norms in your industry.
Protect Your Legal Rights
Many severance agreements include a release of claims, waiving your right to pursue legal action against your employer. An employment attorney can verify that the release is reasonable and doesn’t unfairly limit your rights and help you understand any legal claims you might be waiving, such as wrongful termination or discrimination claims.
An employment attorney can guarantee that the severance agreement complies with federal and state laws, including the WARN Act and anti-discrimination laws.
Negotiate With the Professionals
Employment attorneys are skilled negotiators who can advocate on your behalf, leveraging their knowledge to obtain a more favorable severance package or additional benefits and manage any disputes or disagreements with your employer professionally and effectively.
Having an attorney negotiate on your behalf can lead to more favorable outcomes, as employers often take negotiations more seriously when they involve legal representation.
Finalize the Agreement
Once you and your employer have agreed on the terms, make sure that all changes are accurately reflected in the final severance agreement. Both parties should sign the document, and you should retain a copy for your records.
By signing the agreement, you're typically waiving certain rights, including the right to pursue legal action against the employer. Make sure you fully understand the implications before signing.
After signing the agreement, monitor the employer's adherence to the agreed-upon terms, such as severance payments and benefit continuation. If any issues arise, address them promptly.
Plan Your Transition
Leverage any outplacement services offered and network actively within your industry. Revise your resume and LinkedIn profile to reflect your recent experience and accomplishments. Highlight your skills and contributions to make yourself a more attractive candidate. Take advantage of any career counseling or training opportunities to enhance your skills and increase your marketability.
Carefully manage the severance pay you receive. Create a budget to make sure you can cover your expenses while you search for new employment.
Handling Special Circumstances
If you are part of a layoff or downsizing, negotiate collectively if possible. Sometimes, negotiating as a group can lead to better terms. In cases of mergers or acquisitions, severance terms might be influenced by new company policies. Be prepared to negotiate with the new management team. Executives or high-level employees might have different leverage in negotiations. Make sure you understand your specific position and leverage accordingly.
Reach Out to an Employment Attorney
Negotiating severance can be a challenging process, but with the right preparation and approach, you can achieve a favorable outcome. By understanding your rights under Georgia law, preparing thoroughly, and seeking professional advice, you can make sure that you receive a severance package that supports your transition and helps you move forward in your career.
If you're looking for a Georgia employment attorney, the legal team of Fox & Weiss, P.A. is there for you. Fox & Weiss is proud to serve Atlanta, Savannah, and Macon as well as the counties Fulton, Cobb, Gwinnett, DeKalb, Clayton, Hall, Forsyth, Chatham, and Bibb. Contact Clifford Maxwell Weiss, Attorney at Law, today to schedule a consultation.