Severance Pay: Here is what you should know

Perhaps you are a good job hunter who knows how to negotiate a good salary and other employment benefits. But do you know how to negotiate how you will part? Many employers across the country provide a severance agreement that details the financial terms on which a worker will leave the organization. Negotiating a suitable severance agreement requires you to make considerations regarding the cash and other benefits you need to survive.

According to Ravi Sattiraju, New Jersey employment attorney, negotiating this accord can ease the process of transitioning to a new job. It can also relieve stress and probably offer a good financial cushion. In addition to the monetary arrangement, you should also discuss the continuation of your insurance benefits, help finding another job, and other necessary perks. Note that your strength when negotiating a severance agreement comes from the fact that the organization does not want you to sue or bad-mouth about their practices. Besides, they don’t want you to share their secrets or even work for their competitors.

Plan in advance

In case rumors of layoffs are circulating, you may be tempted to quit before the ax drops. However, staying for a little bit longer might place you in an excellent position to claim your unemployment insurance and probably get a severance package. It is recommended to prepare in advance regardless of whether or not you will be laid off.

Review your critical expenses and resources to determine your financial-related needs. Make a list of all top benefits you would like to negotiate. It is also wise to examine the organization’s severance policy and find out what former workers had received.

Important steps you should take

In the event that you’re indeed dismissed, consider taking notes during the employment termination meeting. Don’t give in to the pressure to sign the severance agreement before you understand everything included in it. Stall for some time to review the agreement with your attorney. Remember, you have up to 21 days to accept and sign the agreement. After signing, you will have approximately seven days to change your decision. So, use this time wisely.

Often, the severance pay provided is 1-2 weeks for each year you worked. But it can be more than that. If losing your job will result in economic hardships, consider discussing this issue with your employer. Generally, you should aim at getting at least four weeks of severance pay for every year you worked. Executives and middle managers usually receive a higher amount.

It is also wise to try to extend your disability and life insurance coverage. COBRA (Consolidated Omnibus Budget Reconciliation Act) facilitates the temporary continuation of these policies. Work with an attorney to determine what’s likely to happen to your retirement plan as well. Remember, stock plan and pension plan vary depending on your state and employer.

Lastly, keep in mind that some employers offer outplacement services. Thus, you may want to request that the service stay with you until you secure a new job.

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