The recent economic downturn has made 2020 a tough year for many companies. As a result, mass layoffs have increased in many industries – travel, hospitality, restaurants and even health care. If you’re an executive in these industries, you may find out your company is cutting your position to save costs. At least, you’ll get a severance package since you’ve been there for years. Yet, what should you know as you negotiate your severance deal with your employer?
Understanding the components of a severance package
First, you need to understand the components of your severance package. Second, you don’t have to accept your company’s first offer. Lastly, you need to realize that severances often aren’t solely about money. So, here are some factors you need to weigh when negotiating your severance package:
- What will your severance pay be? Are you eligible for more severance if you’ve been with the company a decade or more? Often, employers may offer at least six months to a year of severance.
- Will you receive pay for any vacation time or sick time you’ve accumulated?
- Will you receive health insurance for a period of time after you’ve been laid off? If you will have to seek COBRA coverage, that’s very expensive.
- Did you sign a noncompete clause that will limit where you can seek employment next?
- Does the severance include a nonsolicitation clause, so you can’t contact any of your employer’s clients or customers for a period of time?
- Did you sign a nondisclosure agreement limiting what you can say about your employer?
- Does your severance package not allow you to sue your employer? You may have a case for wrongful termination and not realize it.
- Will you ask for references as part of your severance package?
Reviewing the severance package
Once you understand the severance package details, you need to review it carefully. You also should have an attorney with experience in employment law and corporate litigation review it. Severance packages can have difficult legal wording that may be hard to understand. You want to make sure an attorney can explain to you what you are agreeing to. You want to have severance agreement that works in your best interests.
You also can use your attorney to help you negotiate for a better severance package if you feel you deserve that.
Facing a layoff as an executive comes with unique challenges. It may be months before you secure another position. You may have to uproot your family to secure a position in the same industry. You want to do all you can to ensure you get the best severance package you can when facing a layoff.