Severance agreements can provide valuable benefits after your job ends
While golden parachutes may be out of the reach of most of us, a negotiated severance benefits package is often achievable for sought-after employees.
The Wall Street Journal reports that the golden age of “golden parachutes” is probably over-at least for now. Golden parachutes for executives became somewhat notorious during the Great Recession. Shareholders at some companies have, with varying degrees of success, pressured those companies to curb severance perks over the past several years. While they have fallen out of favor, Mainstreet.com reports that golden parachutes have not gone away and will remain with us as long as “high-demand” people can negotiate great deals as part of their employment contract.
Although a true golden parachute may be out of reach for many, negotiating a reasonable severance agreement is often within the realm of something that is potentially attainable. Assuming that a company is amenable to negotiating with you for a severance benefits package, you can usually negotiate a better deal when an employer is seeking to hire you rather than fire you. As noted by Fox Business News, at a senior level, severance provisions are a normal part of doing business. Severance agreements upon hire are less commonly offered below that level unless an employee has special talents and skills.
Forbes magazine has noted that, in negotiating severance, you should always ask for more than mere severance pay. For example, you could also ask to keep unvested interests that you may have such as company matches to a 401(k) plan, deferred compensation and stock options. One benefit that would be quite valuable would be to have your employer continue to pay for your medical insurance for 12 months after you leave. Other perks that you might consider asking for are: (1) bonuses you might have earned; (2) payment for any unused vacation time; and (3) outplacement services to help you search for a new job.
According to the Monster.com website, bringing up the issue of severance can be a delicate subject analogous to an engaged couple discussing a prenuptial agreement. On the one hand, it is to be hoped that-prior to your first day of work-you and your employer are not seriously contemplating that the job might not work out for you. However, the truth is that if you do not take time to hammer out the details of an acceptable severance agreement, you may later regret not having done so.
Monster.com advises that one good strategy to use in negotiating a severance agreement is to “depersonalize” the issue of severance thereby making it somewhat less of a touchy subject. You could, for example, take the position that while you are certainly confident that you will be a success in your new job, you are primarily interested in negotiating a severance package because you merely want to ensure that your spouse and children (or elderly mother if you are unmarried) are financially protected.
Once you come to an agreement on the issue of severance, make sure that you get this agreement in writing. While it does not have to be a voluminous contract, it needs to set forth the terms agreed on sufficiently to avoid any future misunderstandings and to be enforceable in a court of law if the employment relationship goes sour.
Seek legal advice
Those who find themselves in a position of negotiating a severance benefits package should call a Massachusetts attorney experienced in handling employment law matters. The attorney can review the proposed severance agreement language and give you the benefit of his or her legal advice.
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