Negotiating Severance Pay

When an employer chooses to lay off a particular employee, he typically offers a severance package. This severance package typically includes remaining pay to which the employee is entitled, including vacation and sick leave. It may also include special severance pay, which is usually based upon the time the employee worked for the company, as well as his title and responsibilities. Stocks options might also be included in severance pay. If an employee is not satisfied with a severance package, he may ask the employer to renegotiate it. Negotiating severance pay can be complicated, since the employer is not legally obligated to provide it. Further, legal counsel is often needed for the employer and the employee to come to an agreement.

Fast Facts

  • According to one academic survey, severance pay has been increasing among administrative professionals, but decreasing amongst clerical/sales workers.
  • Some former employees request that severance pay be paid over two years. This may prevent it from being taxed at a higher rate.

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