Business, Career, Severance pay series

Severance Pay Series: Six Tips to Help Severance Agreement Negotiations During an Economic Slump

As an economic downturn deepens, some employers may become more conservative with their severance packages by making them smaller. Regardless, this is when negotiating becomes critical for the newly jobless because there’s no indication how long it will take to get a new job.

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Severance packages are usually one or two weeks for every year of service and will depend on the company’s size and job.

In fact, it’s more possible to negotiate now than it was in previous recessions.

Since 2001 the number of employers who say that negotiation played a role in severance packages increased more than 520 percent for employees at the professional level and 450 percent for employees at the administrative level, according to a news release from Lee Hecht Harrison (LHH), a work-force consulting and outplacement-services firm.

Here are six tips for negotiating severance pay when the economy continues a steady decline:

Call recruiters. Start by calling a few recruiters to get an estimate of how long it will take to get a new position.

Discuss hardships. When meeting with the former employer, mention the estimate provided by recruiters and any possible hardships that may arise, but remember to keep emotions in check, treat this meeting as a business transaction.

Ask for pay and benefit extensions. Try asking for an extension in severance pay and/or benefits for the length of time it will take to get a new job, especially keep health insurance in mind.

Remain “active.” If a pay and/or benefits extension doesn’t work, ask to have an “active” employment status even though money or benefits won’t be received. The extension of the termination date will help not only with the job search but also with credit and loan transactions.

Get rehired. Ask for placement on the firm’s list of rehires.

Request job-hunting assistance. Last, don’t forget to ask for references and financial help with outplacement services and memberships for professional and networking organizations.

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