Free 3D Business Men Marching ConceptCredit: lumaxart: a severance package is something most people hope to never experience. If we leave a job we want to do so on our own terms. However, many companies are resorting to layoffs and forced resignations to restructure or shore up their budgets. If you believe that you could be a casualty of this reality, don’t despair. You can still leave on your terms, but jump into action now and start planning your exit strategy.

When people are laid off (or forced to quit) companies large and small will often provide employees with a severance package. Packages can vary by company and even by person. Some companies' packages are better than others. If a layoff or forced resignation may be in your future you’ll want to have the best severance package possible. Start by understanding what a severance package is, read your employee handbook and get everything in writing.

What is a Severance Package?

A severance package is all of the benefits that an employer provides to an employee who is leaving their company. The package can include many components including regular pay, vacation, retirement, health benefits and more. Severance packages are most often offered to employees who are laid off. They can also be offered to employees who quit (voluntarily or not) or are fired, but that is less common.

Find Your Employee Handbook and Read It

Whether you consulted it or not while gainfully employed at your company, your employee handbook has been an important source of information during your time there. It spelled out what your benefits were as well as many expectations of behavior and work guidelines. Now, it may also provide information regarding exiting the company and severance packages so it’s a good idea to at least check.

[RELATED: How to Take Charge of Your Career After a Job Loss]


If you take nothing but that idea away from this article, you will still have picked up something of value. In fact it’s so important it needs stating again. Get everything, EVERYTHING in writing. Leave nothing to chance because it could come back to haunt you. A signed agreement by both parties is the ONLY way to guarantee what you will receive in your severance package and will protect your interests. It doesn’t matter what your employer tells you they will give you. The proof is in the pudding and no matter how great a relationship you had with your employer, the only truth is in your signed contract.

Unfortunately too many people ignore this directive to their own detriment. They trust their employer or they don’t want to come across as demanding or mean because they think it will hurt their chances to be rehired or receive a good recommendation, or more painful, because they can’t handle confrontation. There are literally tons of sad tales from people who did not get anything in writing and it came back to haunt them. Employers didn’t pay the agreed severance, or denied unemployment, or would not provide recommendations. Sometimes it isn’t malfeasance on the employer’s part but a misunderstanding between the two of you. You thought you agreed to one thing and the employer thought something else. Either way you can avoid this from happening by getting your severance package agreement in writing.

If you are the type who avoids potentially confrontational situations at all costs, it’s time toPort-57Credit: Victor Bezrukov: figure out how to deal with it. Avoiding it could literally cost you money and benefits, resources you will definitely need after the layoff or forced departure occurs. It’s just business. Think about it. Your employer is taking care or his/hers. You need to take care of yours. The main takeaway is this. Do not believe an employer who tells you that you will receive numerous benefits yet offers nothing in writing. That’s a recipe for disaster. Now that we’re clear on this point, what terms do you want to negotiate and have spelled out in your severance package agreement? Below are ten important items to consider:

1. Compensation

Money and benefits are key components. Think about your own situation as there may be items in addition to those listed below that you want to negotiate. The following are common.

  • You will of course want to be paid through your last day of work. 
  • You will also want to be paid for any earned unused vacation and personal days.
  • If your company pays out for sick days you’ll want that too.
  • Payment based on amount of service (i.e. a week’s pay for every year of service)
  • Medical and dental benefits
  • Life insurance
  • Retirement (i.e. 401k), stock options, etc. – also, if you have worked at a company long enough to retire, you may want to consider it. The positives are that you can still negotiate, you lock in your benefits and it doesn’t preclude you from searching for other employment.

2. Employment Assistance

Ask your employer for career placement assistance such as resume writing or coaching. Sometimes there are on-site services and sometimes they may reimburse you for services you obtain on your own.

3. Leave in Good Standing

You have been an excellent employee and have always received glowing performance reviews. Awesome. Make sure those evaluations follow you when you depart from your current job. Have your employer note that in your severance agreement. If you are employed at a place where regular performance evaluations are not conducted it is even more imperative that you get this in writing so that you can prove that you were a positive contributor.

4. Get a Copy of your Personnel File

It’s important that you know if there is anything of note, positive or negative in your file. If it is positive, great. If there are negative marks in your file, are they deserved? Can you use the information to improve performance at your next job? For instance, say there is a notation that you were often late. If true, that’s constructive feedback you can use to your benefit. If there is something that you feel is wrong or grossly unfair, especially if you did not know about it, ask to have it removed. Whether this request is honored or not, you will want a copy of your file for your records as well as ask that your severance package agreement state that your company will not speak negatively about you.

hr07Credit: DaveBleasdale: Letter of Recommendation

If you do not already have another position before you leave your current job, you’ll want to make sure you have positive recommendations in place. You should procure your list of professional references from your current employer, either your direct supervisor or other employees who can speak positively about your work. Ask that a letter be placed in your personnel file as well as a copy included in your severance package agreement. Ask that your agreement state that the positive letter of recommendation be used if contacted by future employers.

6. Make Sure the Appropriate Reason for Termination is Listed

In your severance package agreement you want the reason for termination clearly listed as a layoff. Not “resigned,” or “fired,” but as a “layoff.” Here’s one reason why. If you decide to apply for unemployment compensation, your former employer will be asked to complete some forms and answer questions such as the reason you are no longer with the company. Generally speaking, unemployment compensation agencies look less favorably on people who resign or are fired. If “layoff” is not listed in your separation agreement (or worse, you don’t have a written agreement at all) your employer could say that you quit or were fired – both of which could lead to denial of unemployment benefits. If your employer will not state that you were laid off, there is another option.

7. Make Sure Your Employer Won’t Contest Unemployment Benefits

This is a big one and vitally important to have in your severance package agreement. There are many, many examples of people who were laid off or forced to resign through no fault of their own who thought they would have no trouble getting benefits, only to get turned down by the state because the employer contested it. Making sure that you have “layoff” listed as the reason for your departure in your agreement will definitely help, but leave nothing to chance. Make sure that your agreement also states that your employer will not contest unemployment. At least if you are turned down, you have this and other supporting documentation to use during your appeal.

8. Don’t Sign Your Severance Package Agreement

Okay, you have negotiated your best package possible. Now what? Don’t sign it. That’s 01 (218)Credit: Victor1558: Don’t sign it. At least not right away. The law gives you some rights in terms of the amount of time you have to agree to a severance package. Use it. Even if you think you don’t need the time. Losing a job is already traumatic enough. Give yourself an opportunity to work through some of your feelings so that you can look at your document with as much objectivity as possible. For some, hiring an attorney to review the severance package agreement is helpful. For many, the cost of an attorney, compared to the package they will receive makes it feel like it’s not worth it. That’s a personal decision to make. If you are lucky, there may be low cost or volunteer organizations in your area that can help you. Once you sign your document, by law you have a specific amount of time to withdraw your agreement.

9. Keep ALL Paper and Email Correspondence

Finding out that you are getting laid off, or being forced to resign, does not inspire most people to be as diligent about their work product. In fact, your first impulse may be to just say “screw it,” and leave everything behind. That would be a mistake. Fight that urge and keep a clear head. You never know what information you will need, so if you are given time to wind down your operation, use it wisely. Send all emails, especially those related to your job loss to a personal account. When negotiating your severance package, put your understanding in writing, send it to human resources and blind copy it to your personal email account. Even if they don’t respond via email you have evidence of your requests and expectations. 

Business womanCredit: mirimcfly: Keep Calm & Carry On

Keep calm and carry on as the saying goes. Resist the urge to attack. It’s easy to entertain thoughts of sabotage or getting even. No matter how good you think that may make you feel, don’t act on the impulse. Concentrate on maintaining a pleasant and professional air during your remaining time at the company. You want the last impression that your employer has of you to be as positive as the day you were hired. Regardless of the negotiation process, you do have 100% control of this aspect of your departure.

Final Thoughts

As you navigate this process, keep in mind that no matter how generous the severance package is, your employer is not offering it out of goodness of his/her heart. If you accept the package there are terms that you will have to agree to that are solely designed to protect the company. For instance, you will probably need to release the company from any and all claims you currently have or may have against them in the future. You may be prohibited from working for a competitor for a period of time or not allowed to speak ill of the company in any way. You’ll give up the right to sue for wrongful termination. It may not seem like a lot from your point of view, but it is a very important trade-off for the company.

A layoff is not fun. There can be many emotions associated with it like shock, fear, anger, and humiliation. There may also be positive emotions such as relief, especially if the threat of a layoff has been hovering for a long time. You can get through it. You will get through it and you will hopefully look back and realize it was one of the best things that ever happened to you. Don’t look back in regret because you did not get the best severance package possible for yourself. Look forward to your wonderful future.