Laid Off Vs. Severance From Employment

Negotiating a better severance package can soften being laid off.
i Jupiterimages/Polka Dot/Getty Images

A tough economy means knowing how to deal with the possible occurrence of being laid off at some point. Depending on the severance deal you can get – if you're offered one at all – you might be able to minimize the financial blow to you and your family. What's not so commonly understood is that, in many cases, you don't just have to accept what the company throws at you.

Buy Time

    There's a decent chance that you have ongoing work that someone else can't handle. Remind your boss of the human resources rep you're speaking to of this reality. Sometimes companies will allow you to stay on for another month or two, while you finish your obligations there and look for a new job. In addition to stretching out your income, you'll probably have another severance offer at the end of the term you negotiate.

Get Representation

    If you can't negotiate an extension to your employment and the company just wants you gone, consider taking your documents to an attorney specializing in employment law. Sometimes companies interpret an attempt to negotiate as a rejection of their offer, whereupon the entire package ceases to be offered. Severance documents are often filled with legal jargon that is designed to protect the company, not make it easy for you to read. A good attorney may be able to protect any flexible health insurance dollars you have remaining or leverage a confidentiality agreement – which companies really want you to sign – for more money.

Cash Out Your Bennies

    Stock options and 401(k) retirement plans have real value. Asking your now former employer to retain matching or stock options for little longer can pay dividends. If you're let go in the middle of the month, you might be able to have those extended to the end of that period or longer. Always try to pay back any loans you may have on your 401(k) plan to prevent having a large tax burden when that loan is called an early payout.

Think Before You Sign

    Sometimes people think that it looks better on a resume to state that they resigned over getting fired. This might be true in some cases, but when unemployment numbers are high, your case won't stand out as unusual. What will happen if you sign a document stating you left is that you won't be able to claim unemployment benefits. In fact, it's smart to negotiate a clause into severance contract that says the employer won't contest such claims. It's also a good idea to negotiate out of signing a noncompete agreement after you're let go – so you can actually get another job in the industry you're proficient in – without having to wait a year or more.

the nest