It’s not unusual for large companies to tender buyouts or severance packages to union workers and executives. In February 2008, for example, General Motors announced it would offer buyouts as high as $140,000—along with full retirement benefits—to offset its $38.7 billion loss for the year. GM’s goal: to replace higher-paid workers with younger, lower-paid ones. Other companies have dangled packages valued at several hundred thousand dollars—or more—in front of executives.
Can you up the ante if you’re facing a buyout or severance offer? First, determine whether you truly wish to leave. If the answer is no, stay put. If the “itch to switch” to another career is compelling, however, look hard at the numbers: A six-month severance probably won’t cover the expenses of a career move, including education or training, general job-search costs, and living expenses. The equivalent of 12 to 18 months’ salary is more likely to pave the way to a successful career change. Here are some more actions to consider taking:
Retain a labor attorney, if possible. You’re likely to fare better if you bring expertise and objectivity to the situation.
Don’t accept the employer’s first offer. You may be able to push the numbers up with some negotiation. Try to secure four weeks of severance for every year of employment.
Ask for the money in a lump sum, payable immediately rather than in installments.
If you’re close to the end of the year, consider pushing the payout into the following year to diffuse your tax liability.
Negotiate to receive medical, dental, and other insurance coverage while you’re receiving the severance. Make sure you’re paid for unused vacation, sick days, and personal days.
Receive any year-end bonuses now or negotiate to receive them within the package.
For more information about severance and buyouts, visit:
FindLaw. Negotiating Strategies to Maximize Post-Termination Severance
Vault. The Whats and Whens of Negotiating Severance
The Ladders. The Ladders. Negotiating Severance Packages
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