Bad news: your employer just told you that you’re going to be terminated, whether it’s due to poor performance, company downsizing, or just because (one of the pitfalls of at-will employment). With any luck, you may have been offered a severance agreement. But how do you get what you want out of that agreement with your soon-to-be-former employer?
Most employers will offer a severance agreement that outlines the minimum financial terms the employer is willing to provide upon the employee’s separation from the company. However, most employees don’t realize that they, in fact, have options besides just accepting that first offer.
Here are the top five things you need to keep in mind when negotiating.
1. Be Professional But Firm
First, remember that the way you conduct yourself during any contract negotiation is crucial to getting what you want, or, at the very least, finding some common ground between you and your employer so that you can both walk away understanding and agreeing to the contract terms. Therefore, it is important that you be respectful. That said, you should also remain mindful of the fact that you are negotiating financial terms and potential benefits that may need to hold you over until you can find another job. Don’t be afraid to speak up and say no; at this point, the worst that could happen—being fired—has already come to pass.
2. Don’t Be Rushed
Notice how we’re talking about contract negotiation? The second most important factor to be aware of is that a severance agreement is a contract. Once a contract is executed (signed by the party against whom enforcement is sought), it becomes legally enforceable in a court of law. You are going to be bound by the agreement’s terms, so don’t sign anything that you do not understand or do not want to sign. After you sign a severance agreement, you will get only those benefits bargained for in the agreement—and you’ll lose the right to any other recourse.
Your employer must provide you with a “reasonable” amount of time in which to review the terms of the severance agreement. If you feel uncertain about the terms presented to you or you feel pressured by your employer, do not sign the agreement. Take your time in reviewing the terms, then ask your employer to sit down with you to discuss any and all issues you may have.
3. Be Realistic and Objective
You need to know the position that you are realistically in. Yes, being fired can be an emotional process. However, absent any illegal conduct—such as discrimination or retaliation—an employer typically (in at-will employment) has a right to terminate an employee for almost any reason. Many of those reasons make it unlikely that you’ll be offered any severance agreement. If you were let go due to, for example, downsizing, your employer may not have any financial benefits to offer you. Alternatively, if you were fired for poor work performance, your employer is not required to offer you a severance package at all (unless you had an agreement otherwise).
If you come into severance negotiations with “guns blazing”—i.e., angry, disrespectful, cursing—you can take your weak position and make it worse. Therefore, it is essential that you remember that the way you act in these severance talks could adversely affect your future employment opportunities. How? Your almost-ex employer would be well within its rights to relay such misconduct to your future employers.
One Quick Note
While most people are employed at will, if you are in a for-cause employment relationship, your employment cannot be terminated without just cause. In that case, it’s especially important that you find out the reason for your termination. If there is indeed cause, you most likely have already signed an agreement specifying the financial terms and benefits (if any) that you would be provided upon termination. This means you have even less wiggle room to negotiate any different or additional terms. On the other hand, if you are in a for-cause employment relationship and you believe that you were terminated without a just cause, you may be entitled to reinstatement of your position and/or payment of damages under a breach of contract theory.
4. Be Informed About What You’re Giving Up
The fourth factor ties in with the first and second most important factors: you must know your rights. Knowing what you are walking into should help settle your nerves and allow you to remain confident throughout the negotiation.
The most common terms that you should expect to see in a severance agreement include:
- a general or mutual release of claims clause (this agreement not to sue is what you’re giving up in exchange for whatever financial or other benefits you’ll receive);
- a nondisclosure clause (this forbids either party from discussing the terms of the agreement with any outside party);
- a confidentiality clause (this goes hand-in-hand with the nondisclosure agreement and may include further confidentiality terms for company information such as trade secrets);
- a nondisparagement clause (this means neither party can defame or slander the other);
- an arbitration or mediation clause (this precludes a claim from being brought in court, specifying that any issues arising from the agreement will be resolved in arbitration or mediation); and
- a choice of law or forum clause (this specific which jurisdiction’s laws govern the contract and where a claim may be brought).
5. Be Bold—Ask for More
Fifth and finally, don’t be afraid to ask for what you want. If you feel that you are owed more than one month’s pay because, for example, you were fired just one day before you were due for a raise, then ask for more money. If you believe your health benefits should continue for the next several months, ask for them.
Remember, the key is for both sides to feel as if they are getting something out of this negotiation. If you go into a severance negotiation expecting perfection, you will almost certainly leave disappointed. However, if you think you are being wrongfully terminated—remembering that there is no law against being mean and nasty, and YES, you can be terminated just because your boss doesn’t like you—call an attorney. If you want to look up some of the laws that establish illegal reasons for termination, start with the Equal Employment Opportunity Commission at www.eeoc.gov.
Summing It Up
You don’t have to accept the first terms your former employer offers in a severance agreement. When negotiating, remember to:
- Be professional and respectful, but stick up for yourself.
- Take your time and make sure you understand what you’re signing.
- Stay realistic about what you’re entitled to.
- Be informed about your rights and what an agreement should contain.
- Ask for what you want.
When it comes to negotiating severance agreements, most people get better results when they work with a lawyer. If you’re feeling unsure or out of your depth, please contact our office. We’d be happy to help you understand your rights and your options so you can make an informed decision.
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