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What are the Best Tips for Negotiating a Severance Package?

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  • Written By: Jessica Ellis
  • Edited By: Bronwyn Harris
  • Last Modified Date: 16 November 2016
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A severance package is a combination of pay and services sometimes offered to workers who are let go from a job. These packages are typically reserved for management-level employees and above, though most companies have no legal obligation to pay severance unless it is specified in the initial contract of employment. Negotiating a severance package can be a difficult and frustrating period, almost akin to working out a divorce settlement. Understanding basic tips for negotiating a severance package can help employees get the best deal from their former employers.

One important tip for negotiating a severance package is to remain calm and professional. Losing a job is an emotionally upsetting experience that can cause feelings of anger, bitterness, and great anxiety about the future. It is important to prioritize goals right away; it is generally more important to try and get a decent severance package than to vent even justifiable feelings of anger and frustration at a former boss. Start the negotiation process without hostility, as it may be in the best interest of the employee to stop his or her employers from becoming immediately defensive.

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Try to talk to other former employees to determine their strategies and if they received a severance package. Negotiating a severance package may be considerably easier if an employee has an idea of what prior packages may have looked like. Some companies may require employees to sign an agreement that they will not disclose the details of severance, but even knowing such an agreement exists can be helpful. Knowing that the company has paid severance in the past may suggest that it is a possibility in the current situation.

Companies often want things from departing employees that can be used for leverage when negotiating a severance package. Some may request that an employee agrees to sign a document that says he or she will not attempt to take clients to a new business, or that he or she will not work with direct competition for a certain period of time. Do not sign any agreements until a satisfactory severance package has been offered, agreed upon, and signed. If employers are afraid of losing business because of a departing employee, it is in their interest to appease his or her severance requests.

Some people may be tempted to accept an extremely small severance package or suggest only a minimal package out of fear of appearing hostile. While it is important to make reasonable demands, remember the basic rule of bartering: asking for more than is strictly necessary allows a smart bargainer to make small concessions without losing important battles. In addition to salary and benefit requests, consider adding other requests, such as for continued employee discounts on merchandise, gym memberships, or other perks.

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