Last year saw a record number of Americans out of work, including the departures up and down the employment hierarchy of companies that faced record losses resulting in mergers, sales or dissolutions. Getting wind of impending layoffs within a company can help employees to prepare in the event that it will be their turn, and also to realize that there is leverage to be had in negotiating not just the terms of employment but also the exit strategy.
For New Jersey executives or professionals, negotiating a good severance package not only buys time to adjust and plan the next steps, it should also provide benefits such as insurance and other perks that will help the ex-employee to more easily begin new employment.
Severance agreements are often not required by law, but are rather gestures of goodwill that also keep companies competitive. A typical severance package will offer one to two weeks of full pay for every year worked in the company, and a typical agreement will allow 21 days to accept, with seven days to decline or negotiate further.
When negotiating a fair severance package, it is wise to have the input of knowledgeable Bucks County legal counsel that has the skills to not only maximize a client’s benefits, but also to potentially add on bonuses, stock options or the release of personal liability on company obligations where appropriate.
What to negotiate
Outside of the standard one to two weeks’ pay for every year of employment, it is possible to increase this amount to as much as four weeks, especially if the job loss will create economic hardship. It is important, however, to be careful not to accept a lump sum package, which will place the employee in a higher tax bracket.
It is also possible to negotiate insurance coverages not just for health insurance, but also life and disability benefits, and or even an extension of benefits until you can get another job. The recent American Rescue Plan also offers a government waiver of COBRA benefits through the end of September.
Ex-employees may also receive additional benefits such as reimbursement for outplacement or job-hunting expenses, and, depending on company policy and state law there may be pension, retirement or stock vesting options.
Above all, it makes sense to examine your options, knowing that because severance agreements are negotiable, it is always possible to ask for more before accepting the final terms.