Video Transcript: How to Improve Severance Package Offers
Hello, I’m Dan Swanson, partner at the law firm Sommers Schwartz, and I’ve handled employment law matters for more than 30 years. We live in a different time than our parents and grandparents. When I grew up, many people like my dad worked for the same employer over their entire careers. There was a sense of loyalty between the company and its employees. Those days are gone.
In today’s world, the workplace is filled with layoffs, downsizing, rightsizing, re-deployments, re-organizations, and reductions in force that make job security far less certain than it used to be. Did you know that if you are terminated from a job in Michigan, you are only entitled to a maximum of 20 weeks of unemployment benefits? Did you know that the maximum weekly benefit is less than $400? We all know that unemployment benefits will not cover all of your ongoing expenses and financial obligations.
For many employees, particularly those in white collar and management positions, termination of employment often comes with a severance offer. I emphasize the word offer, because many people fail to realize that a severance package, like a contract to buy a car or a house, can be negotiated and improved, providing you with the income and benefits you need while you’re unemployed and between jobs. Offering a fair and adequate severance package is often critical to avoiding financial disaster during that period between jobs. Even if a company initially fails to offer severance, my experience is that frequently companies can be persuaded to reconsider and make a severance offer.
There are several important things that anyone presented with a severance arrangement should consider.
- Is the amount of the severance pay being offered sufficient or reasonable? Many employers calculate severance pay based upon years of service and current celebrate, sometimes giving people the impression that the formula cannot be adjusted. Don’t be fooled. You may be able to negotiate a larger amount which can be critical to you and your family as you research, pursue, and secure your next job.
- Can health care and other benefits be extended? And if so, for how long? You and those who depend upon you need health care, insurance, and other benefits. While COBRA gives you the right to purchase medical insurance under your employer’s group plan for 18 months, it’s expensive. What if your former employer reimbursed you for your COBRA cost while you remain unemployed? When health problems arise in your family, medical insurance is critical, covering the cost of necessary care and providing you with peace of mind knowing that you and your family are protected.
- Are outplacement services in job search assistance included in the severance offer? Although in most cases, you can’t negotiate to keep your job, that doesn’t mean your employer can’t help you land your next one. There are firms that specialize in helping people polish the resumes, learn interviewing and another important skills, and open doors to new opportunities with the cost of these services paid for by the employer. While these services can often be critical to finding that next good job, they are not cheap. Many companies concerned about their public image and reputation recognize that providing outplacement support is good public relations and a valuable benefit for their former employees.
The bottom line is that you shouldn’t accept an inadequate severance package. Your employer put you in this difficult position, and it should do all it can do to help you move on to your next good job and continue your career. If you’ve recently been fired, or suspect it might happen soon, I know how you feel. I’ve helped hundreds of people– executives, corporate officers, managers, and others– negotiate the severance agreements that they’ve needed to move forward with their lives. You don’t have to go through this alone and accept the company’s first offer. Please contact me today so that we can discuss your situation and determine the right direction for you.