The best time to negotiate a severance package or "separation agreement" is before you accept a new position — as part of your new job offer. This is not always possible, however, and it may even be ill-advised to raise the subject in certain situations.

As an aside, if you are currently negotiating a compensation package for a new job, see the related article at Offer-Letters.com: Evaluating and Negotiating Job Offers for Technology and Life Sciences Executives.

Most likely, you are reading this because there has been a decision by your employer to separate you from service, or you have decided to leave and would like to do so with severance and other benefits.

If severance has been offered, you may want to enhance it. On the face of it, you may not appear to have much leverage — but severance packages are sweetened every day.

This article addresses some of the considerations to take into account when confronting this matter for yourself.

It is not easy to negotiate on your own for more severance, but it is even more difficult to induce your employer to pay you to leave. If you suggest you want to leave, the employer will not feel a strong need to pay for what it will get eventually for free. (A potential solution for this dilemma is proposed at the end of this article.)

Assess Your Rights

First, assess your legal rights. Although an attorney would be more likely to uncover existing rights to severance, you should try to identify any rights you may already have from your Offer Letter or Employment Agreement, employee handbook, email or other documentation — including a written separation plan, stock option grants, and equity plan documents — as well as any materials modifying your responsibilities or compensation.

Almost all employees, no matter how high in the org chart, are "at-will" — a legal term indicating that your employment is at the pleasure of the company and can be terminated for any reason or no reason at all.

While dependent upon the law of the state where you are employed or live, employment "at-will" means you can be let go without recourse as long as the reason is not illegal under applicable law and regulations.

If you believe you have been a victim of discrimination, or retaliated against for exercising a protected legal right or refusing to violate the law, you should have your situation evaluated by an attorney.

If your employment was modified verbally, in an exchange of email, or as a matter of course of conduct, this could be evidence of a change in your employment relationship from its original terms.

Think carefully about whether your employer has not met its obligations under a written or verbal agreement — whether the original or one modified during your course of employment, express or implied.

Speaking with an attorney can be helpful in identifying conduct you may have previously minimized in an effort to be loyal and uncomplaining.

In summary, you are trying to determine whether you have: (1) written, verbal, or other rights that have been expressly violated by the circumstances of your termination; (2) whether the company's severance offer meets its contractual obligation to you (if any); (3) a basis for claims that could be settled in connection with a mutually agreeable severance package; and (4) any leverage you may have to engage the company in an open-ended negotiation.

How to Proceed

It has been reported to me — and been my experience as General Counsel in corporations — that employers do not take requests for additional severance very seriously when raised by the employee themselves. There tends to be a marked change in responsiveness and attitude when counsel gets involved, for a variety of obvious reasons.

The purpose of this article, however, is to set out how to approach the negotiation if you are not prepared to hire an attorney.

Most employers are willing to offer severance in return for the employee executing a release of all claims that could be brought against the company, its officers, directors, and others. To the extent the company offers to pay you anything not required by law, it is in return for your release. As a threshold matter: do not sign any document containing a release of claims unless you are already satisfied with what you are to receive in return.

Once you execute the release and it becomes effective under its terms, an employer has no reason to sweeten your deal.

Depending upon the company's perception of your ability to allege truthful legal claims — and your willingness to pursue them with appropriate counsel — you have some degree of leverage. The amount may also depend on the venue in which you can, under employer documents, pursue your claims. Court is preferable; arbitration can be less favorable for getting employers to take claims seriously.

What to Ask For

The level of obtainable severance benefits is highly dependent upon the status of the employee, the size and condition of the company, and the circumstances surrounding the termination. It is therefore difficult to summarize what any individual might reasonably request in a general article such as this.

Severance pay is usually thought of in terms of units of time — a certain number of weeks or months of base salary, plus continuation of health coverage for that same period (or reimbursement of premiums).

One underlying rationale for paying severance is the length of the employee's service. Another is the estimated time for the employee to find an equivalent position. At higher corporate levels, these concepts carry less weight than broader notions of appropriateness — usually based on local or industry custom.

As a legal matter, what the company has recently given to similarly-situated terminated employees becomes a standard to which the company can often be held. It can be helpful to know what others at your level have received, what the stated company policy may be, and what exceptions have been made.

If bonuses or commissions constitute a significant part of your compensation, it makes sense to attempt to obtain what you have already earned or a portion of what would be earned during the severance period.

Stock options and restricted stock grants (RSUs) deserve significant consideration. Although employers do not like to provide acceleration or continuation of vesting in severance situations, it can be successfully negotiated. Key factors include how the termination date impacts upcoming vesting events, and how much time post-employment is provided to exercise vested shares.

Standard agreements typically provide a former employee only ninety days or less to exercise vested options after termination. The employee may have to take a financial risk to exercise in-the-money options — or may forfeit the opportunity entirely. A separation agreement may more profitably focus on modifications to stock or RSU rights (additional exercise time, accelerated vesting) than on cash considerations. This is an area where professional assistance — legal, accounting, or both — can be worth its weight in gold.

Other factors worth considering include: payment for accrued but unused vacation (dependent on relevant state law); renegotiation or elimination of non-compete or non-solicitation agreements; agreement on a characterization of the termination for public disclosure; pre-agreed employment references; permission to keep a laptop or home office equipment; timely reimbursement of business expenses; and renegotiation of preexisting confidentiality provisions.

An employee may also have rights under whistleblower statutes, or under federal and state plant-closing laws, where layoffs of significant numbers trigger automatic severance rights or advance notice requirements. Such WARN Act and whistleblower rights are beyond the scope of this article but warrant analysis by an attorney where appropriate.

Getting a Better Severance Package

In my experience, most unrepresented employees accept what the company initially offers. It is the path of least resistance in an often emotional and difficult time, and for many it makes sense.

For those who choose to proceed on their own, a well-thought-out strategy and a carefully modulated, polite but purposeful approach can yield financial, emotional, and career benefits.

As an alternative, using a trusted attorney can provide the arm's-length distance needed to make the most compelling arguments and present a compelling picture of your contributions.

Whatever your choice and whatever your outcome, you should strongly consider seeking to negotiate severance protections as part of your discussions over your next job.

For additional information, visit ParanzinoLaw.com.