How to Negotiate Severance

A severance offer is a starting point, not a verdict. Most people sign the first version because they are stunned, embarrassed, or afraid that asking will look greedy. It rarely does. The company has already decided to part ways and usually has room to move on terms. I coach clients through this every week, and the ones who pause, get organized, and counter almost always walk away with more than the opening number.

Do not sign anything the day you hear the news

The single most expensive mistake is signing in the room. You will be handed papers and told there is a deadline. Under federal law, if you are 40 or older and the layoff includes a group, you are generally entitled to at least 21 days to consider the agreement and 7 days to revoke after signing. Even when no law applies, you can almost always ask for time. Say some version of: "This is a lot to absorb. I want to review it carefully and may have a few questions. When do you need my response?" Then leave.

Use the pause to read every line, screenshot your final pay stub, save your offer letter, and write down what was said. The leverage you have is highest before you sign and effectively zero after.

Know what is actually on the table

Severance is more than weeks of pay. A full package can include base salary continuation, a prorated bonus, accelerated or extended equity vesting, continued health coverage or a COBRA subsidy, payout of unused PTO, an extended deadline to exercise stock options, outplacement help, a neutral reference, and the timing of your official end date. Each line is a separate negotiation. Companies often move on the softer items, like keeping you on payroll an extra month so you hit a vesting date or a bonus payout, even when they say cash is fixed.

Read the release closely. You are usually being asked to waive your right to sue and to agree to non-disparagement, confidentiality, and sometimes expanded non-compete or non-solicit terms. Those clauses have value to the company, which means asking them to pay more for your signature is reasonable, not aggressive.

Build the case for a counter

A good counter is specific and grounded in a reason, not a number pulled from frustration. Strong reasons include long tenure, a strong performance record, being recruited away from a stable job, a non-compete that limits where you can work next, an upcoming vesting or bonus date you will narrowly miss, or the simple fact that they want a signed release and a clean exit. Tie your ask to one of these.

Decide your priorities before you respond. If health coverage matters most because of a family situation, lead with months of paid COBRA. If you need runway, push on weeks of pay. Anchor slightly high so there is room to settle, and put it in writing: "Given my six years here and the non-compete, I'd like to discuss extending the cash component to X weeks and covering COBRA through year end." Keep the tone calm and collaborative. You are negotiating a clean break, not winning a fight.

Negotiate the terms that outlast the money

Cash gets spent. The non-financial terms shape your next year. Ask for a mutually agreed reference and, ideally, a short written statement of what the company will confirm about your role and departure. Push for make non-disparagement mutual so it binds them too, not just you. If there is a non-compete, try to narrow its scope or duration, or get it waived in exchange for the release. Confirm how the separation will be described internally and to clients, and lock down your exact end date, since it can affect insurance, vesting, and how you describe the timeline to future employers.

If equity is involved and you do not fully understand the vesting schedule or option exercise window, that is the place to slow down and get help. A misread exercise deadline can cost far more than a few extra weeks of pay.

Get the right help and protect yourself legally

If the package is large, the agreement is complex, or you suspect the termination was tied to discrimination, retaliation, a recent complaint, or a medical or family leave, talk to an employment attorney before signing. Many offer flat-fee reviews, and the cost is small against what is at stake. A lawyer can also tell you whether you have leverage you are not seeing.

Beyond the legal review, the harder work is what comes next: positioning the exit honestly, telling a clean story to your network, and moving fast on the search while your package gives you room. That is what I help clients do at The Human Reach, and our Career Amp program is built to turn a forced exit into a better next role rather than a setback.