Severance package values tend to track the health of the economy. During good times, companies typically offer more generous severance pay, but values drop during downturns. When people need help the most, companies offer less. This is because companies themselves are often struggling to survive. So what should employees do to protect themselves?
First, smart employees save money to create their own cash reserves. You cannot rely on your employer to help you, so help yourself by creating your own severance package with a big savings account. Instead of buying new cars or widescreen televisions, save some money. Second, be proactive with your career. If you sense that your job is in jeopardy, don’t wait to get fired – instead start an immediate and aggressive job search and find alternate employment. You never want to become unemployed. Today many companies will not even consider an applicant who is unemployed. Being unemployed today must be avoided at all costs – it can cause financial ruin. It is much easier to find a job while you still have one, so you know what to do.
In certain cases, employees can negotiate substantial increases to their severance packages. These situations are generally limited to cases involving illegal conduct by the employer such as discrimination, sexual harassment, overtime pay violations and the like. For example, in a recent case we handled, our client was fired at the age of 64 after over 20 years of employment with the company and replaced by a substantially younger person. In that case, our client had a potential age discrimination case and we used this as leverage to negotiate a much better severance package. In another case, our client was fired soon after she was diagnosed with a serious disease and we used the threat of a disability discrimination case to enhance her severance pay offer.
Most firings, however, are not illegal. This is because most everyone is an “at-will” employee who can be fired at any time for any reason or no reason at all. In these cases, employees have a tough time negotiating better deals because they have no leverage. So people today should not count on getting a fat severance package to get them through a period of unemployment. During these days of high unemployment, smart employees save money and take control of their careers. The best way to handle a severance package today is to avoid getting one by leaving an unstable job for a better one before you get fired.
Please feel free to contact our firm if you have a question. We have been helping employees for over 20 years.