How to Negotiate a Better Severance Package
Most employees accept the first severance offer their employer presents without realizing it is negotiable. Employers expect negotiation — the initial offer is almost always below what they are willing to pay. An employment lawyer who understands the value of your potential legal claims can negotiate a significantly better package. This guide covers the leverage points, tactics, and specific terms you should push for.
Why Employers Offer Severance
Employers offer severance to buy your release of legal claims. The payment is not generosity — it is a calculated business decision. The employer’s legal team assessed the risk of you filing a discrimination, wrongful termination, or retaliation claim and determined that the severance amount is cheaper than the cost of defending a lawsuit. This means the value of your claims sets the floor for negotiation, not the ceiling.
Leverage Points for Negotiation
Strength of Your Legal Claims
The strongest leverage in severance negotiation is a viable legal claim. If your termination involved discrimination, retaliation, harassment, FMLA interference, or wage violations, the potential damages from a lawsuit far exceed a typical severance offer. When an attorney sends a demand letter outlining these claims, the employer’s calculus changes dramatically.
Knowledge the Employer Wants to Protect
If you have knowledge of company practices that the employer would prefer to keep confidential — not trade secrets, but operational issues, compliance gaps, or management problems — the employer has additional incentive to secure a broad confidentiality agreement backed by a generous payment.
Your Position and Tenure
Senior employees, long-tenured employees, and employees with specialized knowledge or client relationships typically command higher severance because they are harder to replace, their departure carries greater risk, and their institutional knowledge gives them more leverage in negotiation.
Specific Terms to Negotiate
Higher payment amount — the most obvious target. Push for additional months of salary beyond the initial offer. Lump sum payment — preferable to installments because the employer cannot stop paying. Extended health insurance — employer-paid COBRA coverage for 6-12 months or longer. Outplacement services — paid career coaching and job placement assistance. Positive reference agreement — a written commitment to provide a neutral or positive reference. Mutual non-disparagement — ensure the clause binds the employer, not just you. Narrower non-compete — reduce the geographic scope, duration, or industry restrictions. Equity acceleration — if you have unvested stock options or RSUs, negotiate accelerated vesting. Bonus payment — pro-rated bonus for the current year if you would have earned one.
The Negotiation Process
Your attorney reviews the severance agreement and identifies all negotiable terms. They assess the value of your legal claims and the employer’s litigation risk. They send a counteroffer letter outlining your position, the basis for a higher payment, and the terms you want modified. The employer responds, and negotiations continue until an agreement is reached or you decide to pursue legal claims instead.
Most severance negotiations resolve within 2-4 weeks. The employer has a financial incentive to close quickly — every week of delay increases their legal risk and the possibility that you will file an EEOC charge or lawsuit.
The Lacy Employment Law Firm negotiates severance agreements for employees across Philadelphia, Pittsburgh, and New Jersey. Call (215) 515-5924 for a free consultation.
