Severance and Separation Strategy for Employees

When it comes to employment severance, the majority of questions I receive, and engagements I take, seem to start with what I call strategy & feasibility questions. "What should I do first?" and they end with "What should I ask for?".

There a few laws and benchmarks for the practice of severance & separation, little guidance on what your goals should be. It’s no wonder employees don’t know where to start and what outcome they want - let alone how to get it done.  If leaving the job is inevitable, I’ll predict that what you want is to manage the transition gracefully, improve the cycle-time on becoming re-employed, maximize what you can take or optimize from the current relationship.   In some cases, preserving your claims and legal rights and/or protecting your rights in your work product or profession will be your key goals.

What to Consider Before The Severance Discussion

Preparation means performing a realistic evaluation of this new environment you may be going into – perhaps  unemployment – and what you will be taking with you. This is the beginning of your strategy.  Will you have unemployment insurance benefits, COBRA premium payments or other medical insurances, recruiter assistance, a letter of reference, afterglow benefits offered by your former employer, an estimate on the time it may take you to become re-employed, the tools you’ll need to search and prepare for those interviews, and knowledge about what you might receive as future salary and benefits?   For some, the future might mean relocation or retraining.  For others, there may need to be a period of medical therapy and recovery before they are prepared to re-enter the employment market.  You need to know what your future looks like before you define your goals and attempt to propose them to your employer.

How Much Severance?

Do you know what they've paid others or can you find out?  Past practice is a good benchmark.  How long do you think it will take you to replace this employment with an opportunity that presents the same total compensation?  That might be an optomistic benchmark.  Are you releasing them from leverage you have due to some non-distinct discrimination or breach of contract claim?  If so, that might be a 2x-5x mutliplier over what you might otherwise expect.  Helping you identify your leverage and targeting the proposed amount, maximizing the opportunity without sounding ridiculous, is where an experienced attorney can add value.  Similarly, you need to be careful the separation agreement doesn't come with stings attached, and it's unlikely you are going to know what to watch out for and what's standard release language.   

Many employees separating from jobs think their goal is demanding biggest chunk of cash possible. This may be a big mistake for two reasons: First, rarely is the amount of money paid as severance so large it will eclipse your other issues, (and if so, you probably forgot about taxes); and secondly, most employers have negotiated scores of severance and separation packages…they can quickly dismiss over-reaching demands, and then you’re done.

Imagine you are witnessing a first time buyer dealing with an experienced car salesman.  Who do you think has the advantage?  To improve your bargaining position before any negotiation you should consider some serious preparation, strategy development, adopting a good tactical plan and partnering with someone who knows the game.  You will not get a do-over for mistakes, and much is as stake. Have a strategy.