With unemployment rates exceeding 10% nationwide in most states, these have clearly been rough economic times, and many have lost their jobs. Let’s say you happen to be one of the workers who gets called to human resources, and to your dismay, you learn that you are going to be laid-off. If you have ever heard of the term “severance package,” now would be a good time to negotiate one.

So what is a severance package?  According to FLSAClassAction.com it is “an agreement between an employer and an employee which contains the terms under which the employee’s employment will be terminated. Usually contains a release of all known and unknown claims by the employee against the employer in exchange for a sum of money.”

So how does one negotiate a severance package during a job layoff? Here are a few things you can do:

• You can always negotiate a better deal – Even though companies indicate that severance pay is standard for all employees, employees should understand that severance packages are not created equal and can be negotiated.
• Know your leverage – Leverage is the currency you trade with the employer in severance negotiations, therefore valuing it correctly is necessary. Employees should note that employers don’t want bad publicity, may need you for something later and often wants to guard itself against being sued, especially if you’re a racial minority, older or a woman.
• Know exactly what you are going to say – Severance negotiation is personal, and how you say what you say can make a big difference in negotiation. Never come across as making accusations.
• Be creative – Be creative and take a look at whether you would rather convert some of your non-cash severance benefits to cash or vice versa.
• 401(k) vesting – Employees have successfully argued in lawsuits that they were fired so their employer would not vest their 401(k) contributions. Note that leverage can be used in severance discussions, and that you must work for your employer a certain period of time before your employer’s 401(k) matches yours, which means you can take it with you.

Posted by Syddel on January 14, 2010 at 11:40 am.