What to Negotiate in Your Severance Package if You’re Getting Laid Off

March 10, 2020
Guest Post
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This is a guest post by Brian Whalley (@bwhalley), Cofounder of Wonderment and former Director of Growth at Klaviyo. 

You just got laid off. Your head is a whirlwind of emotion and angst. It’s hard to think straight in moments like this. 

The company will offer some kind of severance. This is your silver lining. But you don’t have to accept what they offer outright. You can (and should) successfully negotiate your severance, especially if you’re not negotiating for money. There are plenty of non-monetary items you can include in your severance.

Here are two free but valuable things you can ask for.

1. A signed reference letter

Chances are you could have been a high performer in the wrong part of the company. Or you were working on a project or portion of the business that’s getting shut down. It happens. 

Business Insider compiled a list of 14 things you should do as soon as you get laid off and mentioned “Ask for a reference” at number 6, noting, “If you have a good rapport with any of your remaining bosses or colleagues, you could ask to use them as a reference for future job applications.”

Walking out with a signed reference letter in hand will be an invaluable asset as you begin your job hunt. A reference letter from a manager or executive in your organization can be useful if you receive questions about why you were laid off. 

Here’s an example of how you may want your severance agreement to mention the reference letter, “The employee could request a section of the severance agreement to state: “Company acknowledges and agrees that Employee has performed admirably in his/her work with the Company and Company will provide positive recommendations to any interested new employers of Employee.”’ (Forbes, 16 Key Issues In Negotiating An Employment Severance Package)

Bonus tip: Make asking for a signed reference letter an easy yes by writing the letter yourself. That way there’s no extra work for a busy manager - they can skim it over, sign it, and you can all move on. 

Use one paragraph to explain that you were great but not a fit for the new direction or strategy of the company. 

Share this with your manager or executive. Then legal can quickly review and sign off on the letter. For you, it’s an immediate confidence boost and a powerful tool for the future. Even if you don’t use it, you can look at it when you’re having a bad day and a reminder that you can do great work and find your next job. 

2. Shorten your non-compete

In the event of a lay-off, you’re leaving at their choice. If you have a non-compete, take the time to understand the scope of the non-compete laws in your state. Non-competes vary from state to state, with most states limiting the duration to six months and up to a year and geographically based. 

For example, “Massachusetts employers are prohibited from imposing a non-compete provision on non-exempt employees and may not enforce such provisions against an exempt employee when the employee is laid off or terminated without cause.” (Baker Donelson, The New Landscape for Non-Compete Law in 2019 and Beyond

Say you have a 12-month non-compete, ask them to shorten it to 6-months. That’s just one example, but it will be well worth your time to negotiate the best terms possible. 

Outside of the length of time of your non-compete, you should also find out what companies fall under the list of competitors. “...the employee will typically ask that the competitors be listed and limited to a few direct competitors.” (Forbes, 16 Key Issues In Negotiating An Employment Severance Package)

Make sure you have clarity on what a breach of your non-compete looks like. If you can shorten the length of your non-compete and list of competitors, bravo for you. That’s a win. 

After all, they’re the ones that chose to put your knowledge on the market. They shouldn’t be worried about you. 

Looking out for yourself 

According to the U.S. Bureau of Labor Statistics, one out of ten workers is laid off every year. 

Losing a job can be traumatic, especially in the first few hours after getting the news. Take a deep breath, think about what you want to negotiate (a reference letter and non-compete terms), and cover all of your bases. 

As Brett Rudy pointed out on Twitter: 

Important: Never leave the building until you get what you want. Once you leave the building, your odds of getting anything on your list drop substantially.

— Brett Rudy (@bkrudy) February 28, 2020

“Important: Never leave the building until you get what you want. Once you leave the building, your odds of getting anything on your list drop substantially.”

Know what you want, go after it, and make sure everyone in the room agrees to what’s on paper.

As a reminder, “Always ask for a copy of anything you signed to keep for your own records.” (CNN Business, Just got laid off? Do these 5 things before you leave

In most cases, you’re not the only person getting laid off at your company. Use the event of a layoff to connect with co-workers that are going through it too. 

Olivia Clark from Drafted, who compiles a weekly briefing of layoffs and shutdowns, shared her best advice for people going through a layoff, “Take a moment to collect yourself and take a look around. If you stick together, you can help each other get in front of recruiters. The best way to do that is to create a spreadsheet of everyone’s personal contact information and then try to get that list to a source like the Layoff List that is sent directly to recruiters looking to hire people like you.” 

Much of this advice was given to me by an employment attorney years ago. I have shared it privately many times since. I realized I should put this advice out there as more and more companies are cutting back. 

What advice helped you through a lay-off? Share it with me on Twitter @bwhalley.  

About Drafted

At Drafted, we believe that your company network is your single biggest competitive advantage when it comes to hiring. Our mission is to make it easy for you to leverage your network in the hiring process to find the best candidates. Your network is already powerful, it’s just too much work to make it a priority over the day-to-day of recruiting. Companies that use Drafted see their employee referral numbers go up by 2x, their time to hire drop by 30% and their overall hiring efficiency increase significantly within just a few months.