An employee negotiating their severance package with their boss

Can Other Employees Get a Better Severance Package?

Is your company offering you the best severance package possible? In this article we explain how negotiating for a severance package works.

At Gardner Employment Law, we provide services for almost every employment situation to help our clients secure the best result possible. If you need guidance on your severance package, give us a call.

Can You Get Less Severance Pay Than Coworkers?

Companies must pay the same amount of severance only if it is an employee benefit described in a written policy or handbook. Under Texas law, unless it is part of a benefit plan, an employer is not required to pay severance pay at all. The employer can decide whether an employee receives severance pay as well as the amount of severance pay. As we mentioned in “Is There a Right to Severance Pay,” there is no legal right to severance pay or even receiving the same severance pay as a coworker. 

If you are in the process of negotiating your severance package, you can gain leverage if you know the amount that coworkers have been paid. Contact a person who worked for the company, and ask how much he or she received in severance. Sometimes there is a confidentiality clause preventing the former employee from disclosing the amount. If you can discover how much severance was paid, this will be a bargaining chip. You can take the position that it is only “fair” that you receive the same amount. 

Secure Severance Before a Termination

Ideally, you want to have an agreement for the amount of severance in place long before you receive a notice of termination. The Wall Street Journal writes, “Severance is one important variable that you can and should negotiate as part of your job offer.” Severance packages are better than unemployment insurance. Because you don’t know what the future holds, a severance agreement will be your safety net if you are in a layoff or terminated without cause.

When you are first employed, you enter the “honeymoon period.” Your bargaining abilities with your employer are at their peak. Because the company wants you to stay and perform well, management may be willing to provide benefits as an enticement. In your contract, you and your employer can determine whether the severance pay will be a lump sum or paid over a period of time. Sometimes the amount will be based on years of employment. You could also secure health insurance, unpaid vacation time, extended time to exercise stock options, and executive transition services. These benefits will not prohibit you from receiving unemployment benefits or unemployment compensation from the government.

Negotiating Severance Pay Packages

Negotiating severance pay is all about leverage. As we discuss in “Negotiating for More Severance Pay,” you are trying to strike a bargained-for exchange, which is the foundation of any contract. Regarding employment contracts and severance agreements, both the employer and the employee seek some benefit from the agreement. 

Offering the employer some value is key to getting the severance amount that you want. Some examples of benefits that you can offer the employer include:

  • Providing training or expertise to assist whoever replaces you when you leave;
  • Signing a legal release, which waives your right to file suit against the company;
  • Signing a confidentiality agreement, non-disclosure agreement, or non-compete.

When an executive is terminated, employers avoid publicity or drama. Management wants to ensure that the company will be in just as good a position as before you left. You can use this knowledge as leverage in the negotiation process. You can find numerous articles and books on the subject of negotiations, which can be a vast subject.

There are additional factors to consider. Just like when you negotiate a raise or promotion, you want to remind the employer of your positive qualities. Don’t shy away from mentioning your successes and what you have done for the company. Mention your number of years working at the company or successful projects you undertook. The better perception your employer has of you, the more bargaining power at your disposal.

Hone Your Severance Strategy

Because neither Texas law nor the Fair Labor Standards Act guarantees severance pay, it is up to you to negotiate the best severance possible. Before you sign any agreement, talk with an experienced employment attorney to ensure that you are well prepared. Give us a call today to secure a lucrative severance package.

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