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Weekly Newsletter Vol. 59 - October 16, 2024

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Maximizing Your Severance Package: A Guide for Laid-Off Employees

Layoffs are never easy, but negotiating your severance package can help ease the financial strain and provide additional support while you transition to your next opportunity. Whether you're facing a sudden layoff or have time to prepare, knowing how to negotiate can make a huge difference in what you walk away with. Here’s a quick guide on how to make sure you benefit the most from your severance package, including key strategies and must-have elements to secure before you leave.

Top 3 Ways to Maximize Your Severance Package

Understand the Offer and What’s Negotiable: Before you accept a severance offer, it’s important to understand what's on the table and what might be open for negotiation. Severance packages often include one or two weeks' pay per year of service, but don't assume that's the final word. If you’ve been with the company for a long time or held a senior role, you may be able to negotiate for more.

Tip: If you feel the severance offer doesn’t reflect your contributions or the job market challenges, don’t hesitate to ask for additional compensation. The worst they can say is no!

Think Beyond the Paycheck: Salary isn’t the only thing you can negotiate. If your employer won’t budge on severance pay, look for ways to extend other benefits that will help you through the transition. This could include extending your health insurance coverage, getting paid for unused vacation days, or receiving career coaching services to assist with your job search.

Tip: Outplacement services—like career counseling, resume reviews, or recruiter connections—can be incredibly valuable and often easier for companies to provide than additional cash.

Negotiate How You Leave: Your severance package isn't just about money. It’s also about how your departure is framed and what conditions come with it. You may be able to negotiate staying on the payroll for a longer period, even if you're not working, which can give you more time to secure a new job while still receiving benefits. Also, ensure the company will provide a positive reference or neutral wording when future employers check your background.

Tip: Be sure to discuss what the company will say about your departure. A well-negotiated exit agreement can make future job searches much easier.

3 Things You Should Always Get in Your Severance Package

Severance Pay and Benefits Extension: The core of your severance package is, of course, the payout. Make sure you’re clear on the amount and whether it meets your expectations. Some companies will offer a lump-sum payout, while others may continue paying you for a set period. Ensure your health benefits (medical, dental, vision) are extended for as long as possible or until you secure new employment.

Tip: If health coverage isn’t extended, look into COBRA (or a similar program) and ask what portion of the cost the company will cover.

Payment for PTO and Bonuses: Don’t overlook any unused paid time off (PTO) you’ve accumulated or bonuses you’ve earned. Some companies may not automatically include these in the severance package, but you have every right to ask. Whether it’s vacation time or a performance-based bonus, you’ve worked hard to earn these and should ensure they’re included.

Tip: Ask if you’re eligible for a prorated bonus if the layoff occurs mid-quarter or mid-year.

Review of Non-Compete and Confidentiality Agreements: Many severance packages come with strings attached, like non-compete or confidentiality clauses. Make sure these clauses don’t overly restrict your ability to work in your field. If they seem too limiting, negotiate to shorten the non-compete period or reduce the geographical scope so you’re not hindered in your job search.

Tip: Get legal advice if you're unsure about any agreements you're being asked to sign. You want to ensure your rights are protected.

Why It Matters

Negotiating your severance package isn’t just about getting a better deal—it’s about making sure you’re financially and professionally prepared for the next chapter. By understanding what you can negotiate and making sure you secure key elements, you can give yourself a stronger safety net and more time to find the right next step in your career.

If you’ve recently been laid off or are concerned about upcoming changes, take the time to explore your options and advocate for yourself. A well-negotiated severance package can make all the difference in how smoothly you transition to your next opportunity.

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