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The Art of Negotiation as Applied to Severance Packages

The Art of Negotiation as Applied to Severance Packages

Posted by Jake Kiani | Sep 27, 2013 | 0 Comments

Negotiation is an art. Therefore an employee being terminated should find an attorney who is an able practitioner of this art to negotiate his or her severance package. The attorney leverages a thorough knowledge of the relevant laws as well as applicable jurisprudence to win the best possible agreement for the terminated employee. The strategy involves obtaining all the basic elements found in severance packages and then adding all possible extra features. Executing this strategy successfully requires knowledge, experience, and a flair for the art of negotiation.

Same Basic Principles of Negotiation Apply to Severance Package Negotiations

The attorney negotiating severance uses the same steps as any other skilled negotiator. First, he learns everything possible about the matter being negotiated and about the negotiating strengths and weaknesses of each side. Second, the attorney ensures that all the basic or standard elements are part of the deal. Third, he strives to add as many extra features as possible, using all available negotiating tactics. Finally, when the deal is close to completion, the attorney pulls a rabbit out of his hat to add value for the client.

The first part of the process is quite straightforward: the attorney interviews the employee and gathers all relevant details. This includes the age, race, and gender of the employee and whether he or she has a disability. Also relevant is the individual's longevity with the company, their seniority, the circumstances of the termination, and the expected difficulty of securing new employment. The company's financial status is also relevant. The task of the severance negotiator is to ensure that this research is done thoroughly, so that every possible negotiating lever is identified.

The second part of the process is more complex, as there are many potential aspects of a severance agreement that can be considered basic or standard. What is considered basic also varies from company to company, and depends upon that business's documentation – the policy and procedures manual, the offer letter, and the employment contract (if one exists). Basic or standard elements include the following: final wages, accrued vacation pay, unused sick pay, unpaid commission or bonus income, COBRA benefits, a lump sum severance amount prescribed by formula, and arrangements regarding company pension, stock options, and the 401K account. The attorney's negotiating position with respect to these elements – whether each item is clearly specified in the company's documentation or not – is that these are standard elements that every reputable employer provides. The attorney makes it clear that the client would not consider signing any agreement that did not contain such elements.

Everything is Negotiable, Not Just the Severance Payment Amount

The key part of the grievance negotiation process – where the attorney strives to enhance the package by persuading the employer to add extra features – is the third. Since the biggest single item in terms of dollar value is normally the lump sum severance amount, the attorney focuses on persuading the employer to offer an amount in excess of that determined by the standard mathematical formula. Various arguments can be used here, including references to the employee's seniority and/or longevity. Where there is some basis for doing so (as revealed in the interview), the attorney may allude to the possibility of legal action based on evidence of employment discrimination in the company's treatment of the employee – with reference to age (if over 40), disability, race, or gender. The attorney's strategy is to use all available arguments until the employer agrees to increase the lump sum amount.

Other Items to Negotiate Besides Severance Payout Amount

The attorney also seeks to include in the package – offering suitable reasons for each feature – outplacement services, extended COBRA benefits, a neutral or positive reference, a less restrictive non-competition or non-solicitation agreement, and an adjustment in the timing of stock options. Having won for his client all the basic features of the severance agreement plus all possible extra elements, the attorney proceeds to the conclusion of the process – the signing of the release form – with one or two arguments in reserve. Then, at the penultimate moment, the attorney raises the final point, knowing that the employer will be anxious to complete the deal at this stage. For instance, one possible last-minute argument is a plea for consideration of a special financial need – such as a significant medical expense in the employee's family – that the individual will have difficulty affording post-employment (where there is some foundation for this claim).In this way the attorney uses the art of negotiation to maximize the value of the terminated employee's severance package. Every employee in this situation deserves the services of an attorney who is a master practitioner of this art.

Los Angeles Employment Attorneys and Severance Negotiations Lawyers

The Law Office of Jacob I. Kiani is a Labor and Employment law firm located in Los Angeles, California. Los Angeles Labor Lawyer Jacob I. Kiani assists clients throughout Los Angeles, Hollywood, West Hollywood, Downtown Los Angeles, Beverly Hills, West Los Angeles, Orange County, Century City, and the San Fernando Valley with legal matters related to Labor & Employment Law, Business Law & Litigation, Human Resources Law, Severance Negotiation Law, Wage and Hour Law, and Unbundled Legal Services including Contract Drafting Services.

Los Angeles Labor Law Practice Areas

Severance Negotiations Law

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About the Author


Jake Kiani

Attorney Jacob I. Kiani is a Family Law, Child Custody Law, and Child Support Law Attorney located in Los Angeles, California. Mr. Kiani assists a variety of Family Law clients in Divorce & Marital Separation Law; Child Custody & Visitation Law; Child Support Law; and Domestic Violence Law matters throughout Southern California, including Los Angeles, Hollywood, West Hollywood, Downtown Los Angeles, Beverly Hills, West Los Angeles, Orange County, Century City, Long Beach, the South Bay, and the San Fernando Valley.

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