What Is a Severance Package?
A severance package is compensation and benefits offered to an employee upon termination. While not legally required in most cases, many employers offer severance as a goodwill gesture and to secure a release of legal claims.
Standard Components
Severance Pay: The standard benchmark is 1 to 2 weeks of pay for every year of service. Senior employees and executives often receive more generous terms.
Benefits Continuation: Many packages include continued health insurance coverage for a specified period, sometimes supplementing or replacing COBRA.
Outplacement Services: Some employers offer career coaching, resume writing assistance, and job placement services as part of the package.
Negotiation Tips
Don't accept immediately: You typically have 21 days (or 45 days for group layoffs) to review the agreement. Use this time wisely.
Negotiate the terms: Everything in a severance agreement is negotiable. Common areas for negotiation include the payment amount, benefits duration, non-compete clauses, and reference letters.
Consult a professional: An employment attorney can review your agreement and identify areas where you may be able to negotiate better terms. The cost of a consultation is often worth the potential improvement in your package.