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Severance Negotiation: Calculating Pay, Legal Help, Benefits

This page explains severance negotiation, what to know about the process, and how a lawyer from ContractsCounsel can help you.

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What is Severance Negotiation?

Severance, or a severance package, includes the payment an employee receives from their employer when their contract is terminated and they leave the company. It’s not just about money, but can include other benefits, such as health insurance.

Severance is meant to ease the transition for the employee who is out of a job and will have to find a new one. But sometimes it’s not sufficient. This is where negotiating your severance comes in.

Read the rest of this article to learn about severance negotiations, how to conduct them effectively, and how a lawyer can assist you through the process.

How is Severance Calculated?

Severance pay allowance is usually calculated as one or two weeks of pay per year of employment. That said, the final amount can vary quite a bit based on factors such as the person’s job role, their years of employment in the company, and legal requirements.

There are other benefits that could be included in the severance package, such as:

  • Health insurance. This is when health insurance benefits are continued for a short time to protect the employee.
  • Retirement or pension. Some employees can keep access to these accounts after termination.
  • Career services. To help the employee during their job transition, the company might offer services such as helping them find a new job or drafting their resume.
  • Employee perks. There could be extra perks included in severance, such as laptops provided to the employee or unused vacation days, which can help the company and employee to end their working relationship on positive terms.

What Should You Know About Negotiating Your Severance?

You might want to negotiate your severance if you feel it doesn’t safeguard your financial future. There are some things you should know and do before you start the severance negotiation process.

Read and Review the Severance Agreement

A severance agreement is a legal document you’ll have to sign to accept the terms of your severance, such as how much compensation you’ll receive from the employer. You should read it slowly and not be rushed to sign it.

Check for any vague or confusing terms. While you’re reading the document, spot anything that you feel could be changed and make a note of it.

Collect Information About Your Job Role

Severance pay calculations aren’t set in stone. Circumstances can play a big role in the severance you actually receive, such as why you were dismissed and if your excellent performance in the company has been tracked and documented.

To display your stellar work history, gather important documents such as awards or recommendations you’ve achieved in the company. This could help you to negotiate a higher payout.

Do Some Research

You want what you’re asking from your employer to be reasonable, so consider what they can offer. It can help you to research how typical severance packages are calculated, depending on the job role you held and your level of experience. This will ensure you settle on an amount that feels fair.

It’s also worth chatting to previous employees who were laid off to find out what severance packages they received.

Request Additional Benefits

If you’re unsatisfied with the amount of severance pay, you should ask the company if they will extend your benefits instead, such as with temporary health insurance, as this can ease your financial burden.

Consider Asking for a Lump Sum

If you’ve asked your employer to increase your severance package but they are resisting, what might help is to request a lump sum from them instead of payment installments. This prevents you from the future risk of installments not being made.

Look for Potential Red Flags in the Agreement

Your severance agreement might have some red flags that cause you to not want to sign it. These include if it contains one-sided clauses that seem to benefit the employer and leave you at a disadvantage after termination.

For example, the agreement can be unfair if the amount you’re meant to receive is unsatisfactory but the company expects you to agree to non-disparagement or strict non-compete clauses that affect your job search.

How Can a Lawyer Help You With Severance Negotiations?

When you want to negotiate your severance package, you should consider hiring a lawyer for help. Here are some ways in which they can assist you to get a more favorable outcome.

  • Your lawyer understands all important state laws governing severance in your location, as these vary in different locations.
  • They’re skilled at negotiating your severance package with care and legal expertise.
  • They’ll provide clarity on any vague or confusing terms in the severance package agreement.
  • They’ll spot any misleading information and guide you on when you can negotiate for a more favorable package, as well as what you stand to gain.
  • They’ll challenge unfair or one-sided language and terms in the severance agreement to reduce your risks.
  • They’ll prevent you from signing the agreement too quickly that you sign away your rights or benefits.
  • They’ll guide you on what to say and what not to say so you avoid mistakes that could ruin your chances.
  • As an outsider, your lawyer will be able to use logic to negotiate, without the risk of heated emotions obstructing the process.

Do you need to hire a lawyer for severance negotiations?

If you need to hire a lawyer to help you negotiate the severance package your employer has offered you, you should consult with a lawyer from ContractsCounsel, an online legal marketplace where clients connect with lawyers vetted on the platform.

Your lawyer has legal expertise and years of experience. They will consider your specific situation and effectively negotiate with your employer to assist you after losing your job.


ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


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