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With the pandemic recession and continuing layoffs, you may be among the lucky employees who are offered a severance package upon your exit. But you may be disappointed in the amount and wonder if you could obtain more severance pay.
At Gardner Employment Law, we have negotiated many severance packages and know the strategies that can prompt an employer to pay a fair amount of severance. Call us if that is your goal.
How to Negotiate On the Way Out
When you’re “on the outside looking in,” you might wonder how you’d ever be able to negotiate for a greater amount of severance. You must think in terms of leverage: what do you have of value that the employer wants or, the flip side, what can you prevent from happening that will benefit the employer.
The truth about severance pay is that the employer is “buying peace.” Almost every severance agreement contains a release of all claims that the employer wants signed. The employer will pay you to sign it. If you sign that release, you contractually agree that you will never file any claim or lawsuit against the employer for any event, known or unknown, that has happened up to the date of your signature. That release is part of your leverage, since it is something important that the employer wants and is willing to pay good money, i.e., “severance pay,” to get the signed release.
To obtain more in severance pay than is offered, you must think of an additional value that you can offer or a detriment to the employer that you can prevent. Sometimes it can be as simple as your signature on that release. The employer wants the signed release so badly that it will pay more than was first offered in order to get it.
The Severance Agreement Is a Formal Contract
Negotiating a severance agreement means that you are trying to strike a bargain, a bargained-for exchange. This is a contractual matter. Whatever promise or threat that you pose must be viewed as credible by the other side. The employer must view the specific threat or promise as something that could be carried out which would make the company better or worse off, compared to what’s on the table.
Your opponent in any negotiation will be thinking “What is in this for me? What do I stand to gain if I take the counteroffer [or lose if I don’t take the counteroffer]?” In contract law, this is known as “consideration,” the value that is exchanged. If you have any experience in negotiating contracts, you have a distinct advantage.
Be Careful Not to Threaten “Extortion”
An employee may have a valid legal claim and threaten to file suit if a certain amount is not paid. The line between hard bargaining and extortion may not be crystal clear. The mere threat to file a lawsuit, even a meritless lawsuit with obvious economic ramifications, generally is not deemed to be extortion. However, if false information, unwarranted publicity, grossly exaggerated economic demands with a flimsy connection to the claim, or threatening to file a criminal complaint are used as negotiating tools, these methods probably are illegitimate. Using these methods could cross the line between zealous advocacy and extortion.
Contact a Legal Expert
You may have more leverage in negotiating your severance package than you think. The facts behind the reason for your termination may support a valid legal claim that you do not want to release for a paltry amount. Before signing away your rights, you should talk with an expert employment lawyer who can assess the value of your claim.
At Gardner Employment Law, we’re here to help you in negotiating your severance contract. If you need help, give us a call.