This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Get the Upper Hand in a Severance Package

It's every employee's worst nightmare: The call from human resources, the sit-down with the boss and that HR rep from corporate, and the scripted declaration of "It's not you, it's the economy."

Indeed, workers across the U.S. increasingly are taking the fall as companies reel from the one-two punch of fewer customers and a tight credit market. In January, nearly 240,000 workers received pink slips, according to the U.S. Bureau of Labor Statistics' mass layoff data, which tracks instances in which companies lay off 50 or more employees. The January numbers -- the most recent available -- represent a nearly 60% increase from the year-ago period.

And while any employee would like to avoid getting laid off, it's rarely something you can control. But what you can control is how you leave a company -- and, most importantly, the size of your severance package. Fact is, there's often room to negotiate the terms of a severance package, and employees need to know what to ask for -- and how to ask for it -- to get the best deal. "The severance offer is just that: an offer," says Kirk Nemer, president of Denver-based Career Protection, a national firm that helps employees negotiate severance packages. "That's the leverage employees have to negotiate their own terms."

The first step is to understand why companies offer severance packages even though they aren't required by law to do so. (Hint: It's not just to be nice.) When you sign on the dotted line to accept a severance package, you waive your right to bring employment-related claims such as age discrimination against the company. In that way, offering each employee extra pay and benefits can be a fiscally prudent move, heading off potentially costly legal trouble down the road. "Companies offer severances to smooth the transition when employees are laid off," says Robert Ottinger of The Ottinger Firm, a New York-based employment law firm. "If someone has a potential employment claim, that creates a very un-smooth transition for the company."
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $117.34 -0.81%
FB $107.12 2.76%
GOOG $767.04 3.29%
TSLA $237.19 3.01%
YHOO $33.71 -0.30%


Chart of I:DJI
DOW 17,888.35 +168.43 0.95%
S&P 500 2,102.63 +22.22 1.07%
NASDAQ 5,156.3060 +47.64 0.93%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs