Let’s face it—negotiating severance pay is probably not something you ever thought you’d need to do. It’s one of those topics that doesn’t come up until you’re suddenly faced with an unexpected career shift. But here’s the thing: severance negotiations aren’t just for high-powered executives or corporate lawyers. They’re for you, too.
Whether you’ve been laid off, your role is being eliminated, or you’re simply preparing for the future, negotiating a fair severance package can make all the difference in how smoothly you transition to your next chapter. The good news? You don’t need to be a negotiation expert to advocate for yourself—you just need the right tools, strategies, and a little confidence.
Let’s take a look at everything you need to know about negotiating severance pay and how to walk away with a package that works for you.
What Is Severance Pay? (And Why Should You Care?)
Severance pay is like a financial safety net that cushions the blow of losing your job. It’s typically offered when an employer lets you go due to reasons beyond your control, like layoffs or company restructuring. While it often includes a monetary payout, it can also cover things like extended health insurance, unused vacation payouts, stock options, and even career coaching services.
But here’s the kicker: severance pay isn’t required by law in most cases (unless your employment contract says otherwise). This means that what you get—or don’t get—often depends on what you negotiate. And that’s exactly why understanding how to approach this conversation is so important.
Why Negotiating Severance Is Non-Negotiable
It might feel awkward or even intimidating to negotiate severance pay, especially if emotions are running high after losing your job. But think of it this way: this is your chance to secure a financial bridge while you figure out your next move. A strong severance package can help cover bills, provide healthcare coverage for your family, and even give you access to resources that make finding your next role easier.
Plus, here’s a little secret: companies often expect employees to negotiate their severance packages. So if you don’t ask for more, you could be leaving money—and benefits—on the table.
When Should You Negotiate Severance?
Timing is everything when it comes to severance negotiations. Here are two key moments when you should bring it up:
- Before Starting a New Job: Yes, you can negotiate severance before you even start working! During the hiring process, ask about the company’s policies on severance pay and what they offer in case of layoffs or restructuring. It might feel strange to discuss “what if I get fired?” during onboarding, but trust us—it’s better to have these details ironed out upfront than scramble later on.
- When You’re Let Go: If you didn’t negotiate severance at the start of your job (don’t worry—it happens!), you still have leverage when the time comes. Most employers will present you with an initial offer when they let you go, but remember: that first offer is rarely their best offer. Take time to review it carefully before agreeing to anything.
How to Negotiate Severance Pay Like a Pro
Ready to take control of the conversation? Follow these actionable steps to negotiate a package that works for you:
Step 1: Take a Breath (and Don’t Sign Anything Right Away)
When you’re handed a severance agreement, it’s natural to feel overwhelmed or pressured to sign immediately—but don’t! Take a step back and give yourself time to review the terms carefully.
If you’re over 40, federal law gives you 21–45 days to consider the offer under the Older Workers Benefit Protection Act (OWBPA). Use this time wisely!
Step 2: Do Your Homework
Knowledge is power when it comes to negotiation. Research what’s standard for severance packages in your industry and role—Glassdoor, LinkedIn forums, or even conversations with trusted colleagues can be great resources. This will help you understand what’s reasonable and give you leverage during discussions.
Also, take stock of your contributions at work—did you lead major projects? Save the company money? Exceed performance goals? Documenting these achievements will strengthen your case for better terms.
Step 3: Consult an Expert
If the agreement feels complex or unclear, don’t hesitate to reach out to an employment lawyer or HR consultant who can review it with you. They’ll help identify any red flags and suggest areas where you might push for more favorable terms.
Step 4: Be Strategic About What You Ask For
Here’s where things get interesting! While salary payouts are often top-of-mind, remember that there are so many other things on the table during severance negotiations:
- Healthcare Coverage: Ask for extended health insurance benefits or COBRA stipends so you’re covered while job hunting.
- Outplacement Services: Many companies will pay for career coaching or resume writing services—don’t be afraid to request this!
- Stock Vesting: If stock options are part of your compensation package, ask about accelerating vesting schedules so you don’t lose out on unvested shares.
- Unused PTO: Make sure any accrued vacation days or sick leave are included in your payout.
- Positive References: A glowing letter of recommendation from your manager can be invaluable as you search for new opportunities.
What Can You Negotiate?
Here’s a quick breakdown of what might be on the table during severance negotiations:
| Category | Examples of Negotiable Terms |
|---|---|
| Financial Compensation | Larger payout amounts; lump-sum payments instead of installments |
| Healthcare Benefits | Extended coverage through COBRA; stipends for private insurance premiums |
| Stock Options | Accelerated vesting schedules; extended exercise periods |
| Career Support | Outplacement services; career coaching; resume writing assistance |
| Unused PTO | Full payout for unused vacation days or sick leave |
| Positive References | Letters of recommendation from supervisors; agreements on neutral language in reference checks |
| Miscellaneous Perks | Retaining company equipment (e.g., laptops); gym memberships; discounts on company products |
Step 5: Practice Your Pitch
Negotiation is all about confidence—and preparation breeds confidence! Practice what you’ll say ahead of time so you’re ready when it’s time for the conversation. For example:
- “I appreciate this offer and understand where the company is coming from; however, given my contributions over the past three years [insert specific examples], I’d like to discuss increasing the payout by [specific amount].”
- “I understand there may not be room for additional financial compensation at this time—would it be possible instead to extend my healthcare benefits through [specific date]?”
Step 6: Get It in Writing
Once you’ve reached an agreement with HR or management, make sure every detail is documented in writing before signing anything. Verbal promises won’t hold up if issues arise later on.
What If They Say No?
Not every negotiation will end with everything on your wish list—and that’s okay! If the company isn’t able (or willing) to budge on certain terms, focus on maintaining professionalism and pivot toward other opportunities:
- Ask if they’d consider re-hiring you in another role down the line.
- Use this as motivation to network aggressively and explore new opportunities.
- Take advantage of free resources like online courses or freelance gigs while searching for full-time roles.
Remember: just because one door closes doesn’t mean another won’t open—and sometimes those new doors lead somewhere even better than before.
Know Your Worth.
Negotiating severance pay might feel uncomfortable at first, but think of it as an investment in yourself. By advocating for fair compensation and benefits during this transition period, you’re setting yourself up for success—not just financially but emotionally and professionally as well.
So take a deep breath, channel your inner negotiator (yes—you have one!), and remember: companies respect employees who know their worth—and aren’t afraid to ask for it!
Emily Sprinkle, also known as Emma Loggins, is a designer, marketer, blogger, and speaker. She is the Editor-In-Chief for Women's Business Daily where she pulls from her experience as the CEO and Director of Strategy for Excite Creative Studios, where she specializes in web development, UI/UX design, social media marketing, and overall strategy for her clients.
Emily has also written for CNN, Autotrader, The Guardian, and is also the Editor-In-Chief for the geek lifestyle site FanBolt.com
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