Negotiating Strategies to Achieve Maximum Compensation (Part One)

As an individual, you always want to get the best deal as possible. Being an employee is no different. As an employee, you should always try to receive the best compensation, pension, benefits, severance etc you can obtain.

When facing termination for any reason, do not accept the employer’s first offer regarding severance. Always request a negotiating session to obtain more benefits. Prioritize the critical elements of the package and try to obtain them in order of importance to you. Here’s a section of my book “The Employee Rights Handbook” that deals with just that. Read now and get informed!


The longer you’ve worked at a company and the better your job reviews have been, the more leverage you may have. Most employers have different policies regarding severance wages depending on the industry, company, and your title, job status, and achievements. Although you may initially be offered between one and two weeks of pay for each year worked, ask for more. Avoid accepting the employer’s first offer; negotiate, negotiate, negotiate. I recommend that you attempt to receive one month of severance for each year worked as a starting point. Ask for an additional month of pay for every dependent you claim on your tax return. If this can be achieved, you can leave the company knowing that you have received a fair severance offer.

Stall for time while you are negotiating the package. Delaying the start date before the package kicks in means that you will receive more money in the aggregate. You are in good shape while your regular salary and benefits continue, since you are still being paid. Most terminated employees forget to negotiate this simple point.

Avoid arrangements where you are offered severance for a specified period (e.g., six months) that automatically ceases when you obtain a new job. Rather, make the offer non-contingent on new employment, or arrange that differential severance will be paid in a lump sum when you obtain a new job prior to the expiration of the severance period. For example, arrange that three months’ worth of severance will be paid in a lump sum if a new job is obtained three months before the six months of salary continuation expires.

STRATEGY: If the company offers you three months’ severance, for example, and you want more, tell the company you will accept this provided you receive an additional month of severance (up to three months) for every month you continue to remain unemployed after the initial three-month period from the date of your discharge. Many employers will agree to this because they believe the goal of severance is to help you survive while you are out of work.

If severance pay is to be paid in a lump sum, ask for it immediately, not in installments over time (e.g., 20 percent now and 20 percent every month for the next four months). Some employers insist on structuring severance this way as a guarantee that you will not violate the terms of a restrictive covenant or reveal the terms of the settlement to others, knowing that if you do, all payments will stop. Avoid this arrangement whenever possible.

Since severance pay is taxable, it may be advantageous to defer a portion of the income into the next tax year, when you may pay less in taxes. Speak to your accountant or financial adviser for more details.

If you are being paid severance regularly over time, negotiate for the employer to continue to provide paid medical, dental, and hospitalization coverage for you and your family while you are receiving severance wages. Some of my clients also successfully negotiate to receive regular 401 (k), pension, and profit-sharing contributions from the employer during the severance continuation period. This can add up to plenty of extra compensation.

In some states, if you receive salary continuation with benefits, you may be ineligible for unemployment compensation, But if you receive salary without benefits or are paid in a lump sum, you may be able to file for and receive unemployment benefits immediately, The rules are often tricky, and it is important to understand your state’s regulations before you begin severance negotiations.

If you are offered a choice between a lump sum and salary continuation, discuss the advantages and disadvantages of each arrangement with your lawyer, accountant, or financial adviser. Call your local unemployment insurance department for details. Find out under what conditions you qualify. If you learn you may not qualify, weigh if it is advantageous to receive benefits instead of unemployment compensation before making your decision. Compute the economic effect of receiving paid medical and pension contributions and whether this outweighs the maximum $400+ per week of taxable money you will receive from unemployment compensation. If you elect to defer unemployment benefits or do not presently qualify, you are still entitled to receive unemployment benefits if you are out of work when your salary continuation expires.

In addition to receiving immediate unemployment benefits, there are other advantages to being paid severance in a lump sum. One benefit is that all contact with the former employer ceases. You don’t have to worry that you were overpaid or that periodic payments may stop. Getting a lump sum also gives you the ability to invest the funds immediately or pay bills. But once you accept a lump sum package, your fringe benefits (if any) will stop and you will not receive any more assistance from your ex-employer.

The key advantage of being paid salary continuation is that valuable fringe benefits may continue.

If money is your main concern, there are strategies to receive more cash in lieu of benefits. If the company offers to provide you with paid outplacement assistance, job-hunting, or relocation expenses, negotiate to trade off these benefits for cash if you don’t need them. For example, many of my clients receive outplacement assistance that may cost a former employer up to $10,000. You may be able to substantially increase a severance package by accepting a lesser amount (say $3,500) in lieu of this benefit. This is a good idea if you know you will find another job quickly and don’t need outplacement assistance.

The same is true with respect to medical benefits. If your spouse works and you can be covered under the spouse’s plan at no additional or nominal cost, why not thank the company for its offer of paying continued premiums for your medical coverage and receive, say, 50 percent of that cost in cash?

For a full depth analysis on this topic and many more, visit to purchase “The Employee Rights Handbook” today!

Leave a Reply

Your email address will not be published. Required fields are marked *