Being laid off from your current job is always a stressful thing, especially if it is your only means of income. Layoffs or retrenchments occur when the company is downsizing, restructuring, or shutting down. It has nothing to do with the employee’s performance and so, most companies and businesses offer severance pay or separation agreements for the employees they have to terminate.

Separation packages are often provided to employees as a sign of goodwill from the employer. The amount is usually based on the length of the employment of an employee. This also guarantees that the retrenched employee will not retaliate against the company and will be able to retain a good relationship with them. After all, you should never burn bridges because when everything goes back to normal, you may be requested to go back and work with them again.

But did you know that you can negotiate for a reasonable severance package, especially when you have an existing employment contract?

Know The Requirements

When you get laid off, your contract can give you protection specifically if there is a clause about separation pay.

Find out the details of your separation package in your contract and compare it to what is being offered. This will let you know exactly what you can negotiate. Also, you can ask a trusted colleague or friend to look over the agreement before signing anything.

Know How Your Severance Package Is Computed

Severance packages are computed through various factors: from the length of your employment to the reason why you were laid off. You can negotiate not only monetary compensation but also some benefits like insurance coverage or additional payments for unused vacation or sick leaves. Make sure you don’t leave anything on the table and you can also leverage it with the reason for the retrenchment.

Ask all the questions and exhaust your options. Find out if there’s another reason why you are being laid off and if there is a possibility that the company can transfer you to another department or another location.

Know Your Work History

When you discuss your severance pay, your work history will be examined. As being retrenched is not due to the personal performance of the employee, it can still affect the negotiation for the severance pay. Prepare your supporting documents that reflect your work history to counter the review about your job.

These documents can be useful to appeal for an increase in your severance package and also provide you with extra leverage during the discussions.

If your work history is not notable, then it will be an uphill battle as to why you deserve more.

Ask For Advice

Before you accept any severance package proposal, always make sure to get expert advice from your trusted business mentors or lawyers.

This is important because they can tell you if anything is missing in the proposal and if the package is not sufficient enough in exchange for your services before. They can also explain in detail how you can negotiate to the company to obtain a better agreement.

Getting an expert to help you will also be ideal if your severance package comes with non-disclosure or non-competitive clause since this will limit the places you can apply for in the future.

For example, my friend had a non-competitive clause in her contract that she did not realize when she acknowledged her severance package. Now, a Fortune 500 company wanted to hire her but she cannot be employed due to the said clause. She had to wait for a year before she can join any company within the same industry. It was truly a wasted time and opportunity!

Read More: How To Find An Awesome Mentor At Your Workplace

Make It Reasonable

If you want your negotiations for your severance package to succeed, always have a reasonable proposal.

There are many reasons why you have been laid off and your employer may not be able to provide your severance pay request because of the company’s budget cuts. Therefore, it is important to be reasonable and negotiate the severance package that can work for both you and your employer. As mentioned before, you can look into other benefits like the continuation of your insurance coverage for the rest of the year or payments for the unused leaves.

Read before you sign

Before you sign your severance package, make sure everything is clearly explained to you. Check all the terms, amounts, and details to make sure nothing is wrong and left out.

If there are questions or doubts, best to clear it with the HR and your supervisor before you sign on the dotted line.

Keeping Quiet and Professional

If you successfully managed to negotiate what you asked for, please keep it to yourself. Sharing the conditions of your severance package to your colleagues is just rude and unprofessional. Some employees may not be able to get a package as good as yours and this proud attitude will just make them feel worse. Be empathetic and professional even on your last days at work.

Read More: 4 Things That Can Get You Fired Immediately


When you negotiate for your severance pay, you must remain realistic and stay focused. It will help you to stay open-minded and be professional as you work all the details out. Finally, always review your contract against what is being offered to you, and if you can, ask for advice before you sign the severance agreement.

But most importantly, don’t be too hard on yourself. I always believe that when one door closes, it is to make way for another door of opportunity to open.

Coping with job losses, know that you are never alone in this. Here are some ways you can cope:
Conversation with Patty Wolters on Unemployment During Pandemic Times
You Are Fired! What comes next?
Feeling Ashamed of Being Unemployed
5 Things You Need To Do While You’re Unemployed

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30 replies on “How to Negotiate a Severance Package

  1. “Workers in the workforce first priority is to work,
    pay their bills and be independent, but in tough times
    employers act in their best interest as opposedto their employees,
    the former eat, while the latter go hungry so to speak
    to protect their interest employees should take out insurance on their jobs
    as they did their house, car, and etc., so when lost of jobs occur
    as with COVID-19, the insurance company pay employees their job wages dollar-for-dollar”

    By: Van Pince

    Liked by 3 people

  2. Great write-up, Kally! Severance packages are part of the business world even in the best of times, and they are much more common now, amidst a crisis. Of course, companies still retain enough prosperity to offer generous terms if you know how to negotiate for them. Your article provides valuable advice in this regard.

    The best advice, I think, is to be quiet about the conditions attending your exit. Not only is it decent not to betray the company’s trust, but employers also will remember your discretion when they’re in a position to re-hire people.

    Plus, as you observe, it’s likely the company will offer different packages. The last thing you want to do is to inspire (or to suffer) resentment if it becomes obvious different people got different things.

    Naturally, nobody wants to get a severance package, but your ideas will help to make a bad situation slightly less awful. Thanks for that, Kally.

    Liked by 1 person

    1. Thank you so much for your input. Really appreciate it and yes, I do agree with you on the keeping quiet part. No need to show off if you think you’ve got a new deal, neither should you cry about it if you think you’ve got a bad one. If you are not pleased with your deal, negotiate your own. Otherwise, seek a recourse with your lawyers.


  3. I agree it is important to read and understand EVERYTHING. I am on the fence about remaining quiet, I had someone tell me they were low balled, because  they were a mother, and one of color.  She shared this with a few close coworkers (all women) and they too had also received similar (low) severance packages, and chalked it up to fairness across the board. They asked the men how they felt about it, and it turns out the men were giving substantial severance packages. This cautionary tale leads me to tell everyone to ask HR how severance packages are calculated.


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