A severance agreement is made after a layoff. These agreements help protect the company and the employee.

If this is your first time dealing with a layoff package you might not know all the legal terms included. This article will help familiarize you with those terms. After reading this article you will be ready to negotiate a great deal out of your severance package.

What should be in the severance package?

1. Severance Pay

Severance pay can be paid as a lump sum or in installments. This compensation will vary in amounts based on the salary, years in position and employment contact of its individual.

The severance pay can be heavily negotiated. This is because it is not governed by federal law. As such, employers typically can offer higher amounts of severance pay during the negotiations. It is unlikely that the original severance pay amount offered is the ceiling. Therefore, if you don't want to miss out on money that could be yours, you need to ask for it.

Many employers will include details about your severance package in the employment contract. Before starting negotiations make sure to look through the contract you signed when you first started in the company. This will help you know what to expect.

2. Insurance and Benefits

There are often federal regulations that govern the period during which a company is mandated to continue providing benefits to a laid-off employee. The Consolidated Omnibus Budget Reconciliation Act (COBRA) provides workers with the right to health benefits even after job loss.

Due to the existence of state and federal laws on this, a company might have limited options for increasing the period when these benefits are available and provided. This is why when negotiating your severance package you should be aware that while COBRA covers health benefits for up to 18 months after termination, your company is not required to cover the premiums. In this case, you are much better off negotiating premiums than trying to increase the coverage period.

3. Non-Compete and Non-Solicitation Clauses

Non-Compete and Non-Solicitation Clauses stop a company's former employees from working at competing companies.

When negotiating these clauses make sure that the restrictions set are reasonable. Non-compete should always be limited to a geographic area or time period. If the terms of the non-compete are too broad you won't be able to find work in a related field. This could harm your career trajectory.

Non-solicitation clauses differ as they block you from trying to solicit the clients or employees of your former employer for a certain duration. These clauses are meant to block you from poaching talent or clients that the company had previously found and trained. The non-solicitation clauses are often more important if you are aiming to open a competing company of your own following your departure.

4. Waiver of Claims

Occasionally, the severance package includes clauses that stop you from pursuing legal action for wrongful termination from your previous employee. Often these claims will also handle claims of discrimination or harassment. Therefore, these are clauses that you need to be very careful about signing as you don't want to find yourself in a position where you are not allowed to bring forward a legitimate claim against your previous firm.

How to be prepared to negotiate better severance pay?

When it comes to negotiating severance pay and your overall layoff package the most important thing you can do is research. Before you ever walk into that meeting you need to have a good grasp of what employee rights you have under state and federal laws. These rights cannot be waived. If your severance package includes any such waivers you should bring it up during the negotiations.

The second thing you will need to research extensively is your employment contract. In most companies, the employment contract will provide you with additional protections and rights. It is also possible that your employment contract set in place the terms and specified the amount you should be paid in severance pay.

If you are uncertain about the package that has been offered and how good it is, the best things you can do are the following:

1. Check out our database of other severance packages to see what makes a great severance package, and submit your own severance package.
2. Contact an employment attorney who can help you negotiate a better severance package for you.

Knowing your rights and the terms of your employment contract can help you choose between using an attorney or not. This can be crucial as a good attorney could get you a better package with more favorable terms.

Final Thoughts

When it comes to your severance package there are many aspects and details that you will need to be ready to negotiate if you want to succeed. The most important thing is to know what to avoid and what parts of the agreement are not on the table for negotiations. You can figure this out by comparing your severance offer to what others have received using our tools. This will help you focus your energy on negotiating the parts that could actually make a difference, including your severance pay, benefits, and non-compete clauses.

If you are not sure that you can negotiate the best deal on your own, then hire an employment attorney. Having someone in your corner can help you feel more confident during negotiations. An attorney will know exactly what you deserve and the best way for you to get it.