What is a Severance Agreement Negotiation?
A severance agreement is a legal contract between an employer and an employee that explains how employees are compensated when they leave the company.
Before agreeing to its terms, you should check if there’s anything in a severance agreement you want to negotiate for a more favorable arrangement.
Read the rest of this article for clarity about how to approach severance agreement negotiations and how a lawyer will assist you with the process.
What are Key Terms to Negotiate in a Severance Agreement?
A severance agreement usually contains common terms that are negotiated between parties, such as:
- Payment. This states how much severance pay the employee will receive. Employees might want to negotiate it for a more favorable package, such as by including more benefits.
- Benefits. You might want to negotiate for the opportunity to continue receiving benefits, such as health insurance, after the employment contract ends.
- Non-compete clause. This restricts the employee from working for competing companies for a certain period of time. It should be negotiated if it’s too broad or restrictive.
- Confidentiality. To protect the company’s information, confidentiality clauses might appear in the agreement. Employees might want to negotiate what kind of information to protect and for how long after contract termination.
- Repayment. To protect your interests, the agreement might state provisions that allow the employer to recover the severance payment. Check that this is clear and conditions triggering it are fair to both parties.
How Do You Negotiate a Severance Agreement?
There are some important things to consider if you want to negotiate severance agreement terms to make discussions successful.
Consider Stock Options
In cases where the employee was offered stock options from their employer, they will be entitled to get them when they leave their job. However, employers might offer cash for stock options. Employees should consider what’s best for them and if there are any restrictions on the options before accepting cash payouts.
Check Calculations
Do your homework before negotiating terms in your severance agreement. Calculate your salary, accrued leave, commission, equity, and other benefits to see exactly what areas require negotiation to get more favorable terms.
Use Your Leverage
A good strategy in which to approach negotiations is to consider your seniority and tenure, as well as any termination circumstances. This will strengthen your position during discussions and help you to identify what is reasonable to request from the employer.
Think Beyond Monetary Benefits
You should consider more than the money you’re receiving. Negotiate other benefits, such as health insurance, retirement contributions, and any other benefits that could provide value when searching for another job.
Get a Legal Contract Review
Before negotiating a severance agreement, it’s advisable to hire a qualified lawyer who can provide a thorough review of it. This will help you to identify any areas you should discuss for more favorable terms.
On ContractsCounsel, one of the largest online legal marketplaces, you can easily access a curated network of qualified lawyers who have been vetted on the platform and have experience in contract drafting and review.
To request that a lawyer on the platform reviews your agreement, follow these easy steps:
- Go to the ContractsCounsel marketplace, where it’s free to post a project or request.
- Select ‘One-time project’ and ‘Contract review.’
- Post your project. Include a few details to help you match with suitable lawyers.
- Wait for bids. You’ll receive multiple bids from lawyers on the platform who are ready to assist you.
- Review lawyer data. The platform provides information about lawyers, such as their location, years of experience, credentials, and client ratings for completed projects on the platform.
- Select a lawyer to hire. They’ll review your severance agreement for a flat fee.
Do You Need a Lawyer to Help You Negotiate a Severance Agreement?
Hiring an employment lawyer to help you negotiate a severance agreement is worthwhile because you don’t want to accidentally give up certain legal rights in exchange for compensation from the company.
A lawyer will help you by doing the following:
- Providing a clear agreement review to explain all its terms.
- Identifying your legal rights and if the proposed severance package meets your requirements.
- Calculating exactly what you should receive, such as in terms of salary, bonuses, and benefits.
- Negotiating the total severance amount and assisting you to determine exactly what additional compensation you should discuss with the other party.
- Considering the release of claims you’re asked to waive that could affect your negotiation position.
- Discussing non-compete and non-solicitation provisions so that their scope can be amended, if required, to protect your future interests.
- Maintaining an objective perspective to ensure negotiations remain professional and geared towards your interests.
- Making sure that the final severance agreement reflects the terms that are negotiated, ensuring that you don’t rely on unreliable verbal promises.
Where Can You Find a Lawyer for a Severance Agreement Negotiation?
If you need to hire a lawyer to review and negotiate your severance agreement, you don’t have to call traditional law firms to find one who’s experienced and reputable. Using an online legal platform such as ContractsCounsel makes it easy to connect with a vetted and reputable lawyer.
A lawyer will help you by considering your specific situation and what you hope to gain from the severance agreement. They’ll use their expertise and experience to formulate a strong negotiation strategy that helps you to gain a better deal and protect your interests when you leave your current company.