Severance pay and offer negotiation

Tell them you have a vacation planned to decompress and start fresh with a clear mind

Severance packages

Last week, I wrote about aspects of the job search for recently laid-off employees.  Specifically, what should they consider as they look for their next gig? The post was intended to help job seekers overcome stereotypes they may unknowingly encounter in the job search. Employers, hiring managers, and recruiters are all people. We all hold preconceived notions based on experience. The experience of being laid off from a large brand comes with its share of baggage. Last week’s goal was to outline proactive steps job seekers can take to overcome stereotypes in the job search.

Since last week’s post, I have received several emails asking how to handle the severance packages that have been offered. Several emails were regarding accepting job offers from new employers.

The gist of the questions was summed up below, per one reader who posted their question in the comments section: 

“I heard we will lose our severance package if we start a new job before X date. Any advice on how to juggle around that?”

This is a great question. I should have addressed it in the original post. Before I answer the question, I thought a high-level summary of how employers and employees view severance packages is relevant. Per usual, I want to provide the business logic to the advice. Please keep in mind that these are high-level thoughts related to the question above, asked in its entirety. 

Both sides of the severance package coin

In my experience, there are several ways to view severance packages. One perspective is the company’s view of severance packages; the other is the employees’ view. Unsurprisingly, the views of both parties are very different.

Unfortunately, I have been responsible for handling several layoffs domestically and abroad. With this in mind, I understand how companies view severance packages. I have also been laid off, and I know how I looked at and thought about the severance package and experience.

Laid Off Employee:

Often, employees view a severance package as something “owed” to them when they are laid off.  When I have worked with employees who have been through a layoff, they often expect a severance package, and in some cases, expect it to be required. These are expectations regardless of an employee’s tenure.  

As employees, we have given our hearts and our souls to our employers. We have been loyal to the company in hard times. In some cases, many years of service have been given, and it is easy to feel “owed”. When we find ourselves suddenly without a job through no fault of our own, with bills to pay, it is easy to look at the severance package more as a settlement for pain and suffering. I have been there. I understand this.      

Insurance settlement vs. severance package

When we are injured in a car accident, and it is not our fault, the insurance company will pay for any medical expenses. In addition to this, when it is appropriate, the insurance company will pay you for your “pain and suffering”. We may have received $5K to fix our car, $10K to pay our medical bills, and, in some cases, $50K for pain and suffering.

The company’s view of a severance package

The company looks at employees as service providers at a very high level.  As employees, we provide a service that the company pays us for.  We work for 2 weeks, and then we are paid for 2 weeks of work.  Just like contractors, we work, and we are compensated. If we were contractors or vendors providing a service to the company, we wouldn’t ask for a “severance” package when the job was complete.   

For the company, a severance package is designed to help a recently laid-off employee during the transition period when the employee is looking for the next job and has no income. In most cases, employers are not required to pay severance.  Paying severance may be the “right thing to do,” but it is not required.

Why layoffs happen

Remember, layoffs usually happen because the company is in financial hardship or wants to improve its position. When a company is trying to strengthen its financial position, paying 2 months’ severance to employees who are not providing services is difficult.  Do large companies have cash in the bank?  Yes, absolutely.  Does a local company want to be known as a good employer and have good relations with its customers and the community?  Yes, large brands want to reassure remaining employees that they will not be left high and dry if something else happens to the company, so they don’t all run off. Probably. 

Do companies that lay off employees consider severance packages “pain and suffering” payments?  No.  Do they look at them as “loyalty” payments?  No, they do not. This is a business with a board of directors and stockholders who want results.   

Back to our initial question:

I heard we will lose our severance package if we start a new job before Sept 15.  Any advice on how to juggle around that?

Layoffs took place the last week of July, and it sounds like severance for some readers will be about 6 weeks.  I don’t know the employee’s tenure, but by most standards, this is damned generous.

I know that it sounds like we are leaving a couple of months of pay on the table if we can hook up a new gig on August 1, but try not to look at the severance as the company saying, “Hey, we screwed you, here is something to ease the pain and make you whole. Look at this STRICTLY as an “I know it isn’t optimum, but this severance package is designed to help tide you over until you find a new job.”  And this is precisely what it is. It isn’t a retirement bonus; it isn’t a bonus for 20 years of service. It is a company trying to do the right thing for the ex-employees, the business, and its stockholders. This is not for “pain and suffering.”

What pain and suffering is

Generally speaking, “pain and suffering” payments are designed to help us pay for expenses moving forward, like physical therapy, or because we lost the use of a limb. These insurance settlements are designed to help make us “whole.” If we are in a car accident and need repairs but are not injured, the repairs will be covered. We won’t receive a settlement for pain and suffering. If you talk with people who have received settlements for pain and suffering, I am willing to bet that these victims wish they had not been injured and wouldn’t have needed the settlement.  

If a company intended to pay for pain and suffering, the company would pay out a single lump sum payment and say you can keep the entire payment, whether you find a job or not. Sorry, this sounds like crap, and I don’t know the exact structure of every individual severance, but it sounds like this is how our readers’ severance is structured. Again, I don’t know the specific situation, but to me, what our reader received seems fair to employees and stockholders. 

An unemployment check

Think about it like an ‘unemployment check” from your ex-employer. This isn’t a government unemployment payment paid out over many months. This is a single payment. 

Let’s say we are unemployed and collecting unemployment benefits from the government. If we collect unemployment benefits and find a job, our unemployment payments will end. We will not try to collect unemployment after we find our next gig. 

How do I juggle this?

We want to start looking for a job ASAP.  We don’t have to accept the position, but we want to start looking.  Don’t let the severance package stipulations affect your job search. I am assuming an offer won’t come in the first 15 days after the layoff. We need time to create a resume, prepare for an interview, and negotiate. Tell your potential hiring manager at the offer stage (not the first interview) that you have vacation plans. Explain that after you were laid off, you decided to clear your head and start your new job with a clear mind. Explain that you ALREADY plan to take your family on vacation, have a hotel booked and paid flights, and GUESS WHEN YOU GET BACK? When do your severance payments from your past employer end?

Moving forward

Hopefully, we can negotiate a better salary than your prior gig. With this in mind, you will want to start before those severance payments end, so adjust your “pre-planned vacation speech” accordingly. 

If you have a vacation planned with the family to clear your mind after a layoff or to go back home to spend time with family to re-ground yourself, most employers will be willing to wait an extra week or two for that kind of smart move. It’s in their best interest to hire a relaxed and refreshed employee. I know I don’t want to employ bitter, angry employees who haven’t gotten over it and need to pay the bills ASAP.   

Again, I am sorry we are in this situation, and hopefully, the above provides perspective.

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You got this,

HRNasty

nasty: an unreal maneuver of incredible technique, something that is ridiculously good, tricky, and manipulative but with a result that can’t help but be admired, a phrase used to describe someone good at something. “He has a nasty forkball”.

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