Employers almost always require the employee who is to receive severance upon separate to sign a Release Agreement, agreeing to not bring any employment related claims or lawsuit against the employee in exchange for severance payment. In other words, in exchange for severance, an employer buys a piece of mind of knowing that you will not come back and sue them for wrongful termination, discrimination or any other employment related claim. This is the main reason many employers issue severance payments. Other, less tangible reason include preserving good image with the employee and/or rewarding long term employees who are terminated or laid-off for their service.
Three Steps for Effective Severance Pay Negotiation
Effective severance negotiations with your employer should generally include at least three steps:
1. Review your employee handbook and any other written policies to determine whether your employer has specific policies regarding severance pay. If these policies exist, check how they apply to you and your termination.
2. If you suspect that your termination might be unlawful – i.e. due to discrimination or retaliation, and the employer tries to classify it as a more “innocent” separation such as a lay-off or restructuring, consult with an experienced employment attorney to determine whether you might have a case against your employer. This doesn’t mean that you have to sue your employer. Another, equally important benefit of knowing that you have facts supporting a potential wrongful termination claim, is suing those facts in negotiating a higher severance.
The two classic suspicious situations are:
(a) You are an older worker. A younger employee was hired who you have been training during the past few months to perform many of your duties. And now, once your training of him has been substantially completed, you are being laid off. This surely looks like age discrimination.
(b) You have been on intermittent FMLA or other medical leave. The employer approaches you and asks you whether you would rather resign in exchange for severance instead of continuing to go on medical leave on and off. This is usually an attempt to drive out a disabled worker instead of continue to deal with accommodating his medical condition or disability.
Regardless of the circumstances of your termination, a conversation with your management during which you try to negotiate a higher severance is not the time to tell the employer how bad they are and how happy you are that you are leaving, and it’s certainly not the time to threaten the with a lawsuit. Remember – the employer holds the check book, and no one pays more when they are threatened or being told how awful they are.
3. If the employer classifies your termination as resignation, makes sure that it’s clear in the document that your resignation is in lieu of termination or make sure that any other language included that reflects that you didn’t voluntarily quit, in order to make sure that you are eligible for unemployment benefits.
Deadlines for Returning Sign Severance Agreement to Your Employer
You should not hesitate to ask for a few more days or longer to review and consider the severance and release agreement provided to you. The deadline that the employer gave you to sign and return the document is not set by law. They just want to close the matter. Therefore, they have 100% discretion to give you more time to consider your options, and most of the time the employers have no problem doing that.
Do You Need an Attorney for Severance Negotiation?
The answer to this question really depends on each individual situation. The main factors that should determine whether you need an attorney to negotiate your severance are: (a) your level of comfort negotiating with your management; and (b) how likely you think that an attorney will do better than you are at trying to negotiate a higher severance (i.e. – is your employer likely to take the negotiation more seriously because you have legal representation?)