Lay-offs and Severance – a Better Way to Negotiate

It is a common practice for many employers, especially the larger employers, such as the software companies in San Francisco and Silicon Valley, to offer a severance package to the employees who are about to be laid off due to downsizing or restructuring. The amount of severance depends on several factors, but the main ones usually are: (1) the company’s financial condition and it’s corresponding ability to make severance payments; and (2) the amount of employees to be laid-off; and (3) the length of service of any particular employee at the company.

It is much harder to negotiate a higher severance than the one offered in a mass lay-off, as the employer will argue (and justifiable so) that you shouldn’t be receiving greater severance than all the other employees. However, if you are the only person to be laid off from your department, or one of the few, you should take the opportunity to negotiate a higher severance directly or through an attorney. Like in many other aspects of work (and life), when it comes to negotiation of a severance package, and employee will normally get much more with “honey” than with “vinegar.” This means that accusing an employer of wrongfully terminating you, especially without having solid evidence to support your accusations, and threatening with a lawsuit will not help in these negotiations and will likely achieve the opposite effect from the one you desired, antagonizing your employer, which never leads to desire to help and generosity.

You must remember that unless paying out severance is a company’s formal rule/policy or one of your stated terms of employment (which is quite rare) such a payment is completely discretionary. Therefore, the right way to negotiate a severance package or a higher severance package is by trying to evoke empathy to your anticipated unemployment and financial hardship and forget about threats and accusations. If you have had a decent relationship with the decision maker during your career at the company, you might just be surprised as to his or her ability to relate to your situation, especially in these hard times, and your manager’s desire to actually make a step to help you in getting a higher severance upon lay-off. Like in politics, successful severance negotiation requires diplomacy and civility.