Often an employer will resist altering a standard severance package, especially in the case of a large layoff. In this case, it is important to find creative ways to stretch the package while technically maintaining the integrity of the “standard mold.” For example:
- Defer the date of termination. This can be accomplished through an extended “notice period” or continued employment. It can be understood (or stated) that the executive will not be expected to perform service during the extended period, but will use the time to look for a new job. This, in effect, lengthens the time that the executive will be paid, but technically does not alter the standard severance package.
- Convert benefits to cash. If you do not need a benefit offered by your company, (for example, your company offers you extended medical benefits but you are also covered by a spouses health plan), attempt to exchange the benefit for increased financial compensation.
- Consider a consulting agreement. Sometimes it is advantageous for both the employer and the executive to enter into a consulting agreement after the termination. This is a way for the employer to avoid trade disparagement, and competition for clients, as well as to continue to make use of the executives expertise and institutional memory. The executive can be paid to be available or “on call,” which will impose slight burden on the executive and can enhance the settlement without altering the employer’s standard severance package.
- Request that the employer pay for your attorney’s fees related to the negotiation of the severance. Often this payment may be traded off against other payments which would be subject to wage taxes and is therefore beneficial to both parties.
- Structure the settlement with tax-deferred payments to be made in later taxable years.
- Offer confidentiality for a non-standard severance package.
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