How to Negotiate Your Severance Package in Tech

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Being let go isn't fun. However, you may be able to use this opportunity to your advantage! Learn how to negotiate the terms of your severance package to maximize your return on the way out.

You already know you're leaving. So why not try negotiating the terms of your exit? The upsides might greatly outweigh your nervousness.


- A severance package is a binding legal agreement. A severance package includes both severance pay and other benefits.

- Identify every part of your severance package and notice if any key benefits are missing.

- Cash isn't everything and some companies will struggle to negotiate more cash or salary payouts. Negotiate around other benefits too.

What is a severance package?

A severance package, also known as a "separation agreement" or a "severance agreement," is a binding legal agreement between an employer and a former employee. It includes everything from financial compensation to extra benefits.

Companies usually offer severance packages during involuntary layoffs. If an employee did nothing wrong, but the company restructured, severance packages are an act of goodwill.

A company can avoid public retaliation by providing a once-valued employee with additional paychecks to support them while finding a new position.

Severance packages often include requirements that an employee must meet to receive the severance.

Think of non-compete clauses or not saying bad things about the company publicly.

Negotiating your Severance Package

Here are the 5 critical steps for negotiating an exit package:

Step 1: Understand What's Offered

Many people immediately associate severance packages with severance pay. And rightfully so—they're almost identical in the name.

But there are many different components to a severance package.

If your former employer is firm on the amount of money they can pay you, you may still be able to increase the value of your severance package.

Identify each component being offered and look to see if any of the other benefits are missing:

Severance pay

Severance pay refers to cash benefits. A standard amount of severance is anywhere from 30 days to 6 months of salary. It mostly depends on your seniority and tenure at the company.

Paying out cash is one of the hardest for a company to do. It may be easier to negotiate other benefits rather than money.


If you have paid time off, such as sick days or vacation days, you may be able to get paid for the time you haven't used.

Some companies list their policy on paying for paid time off in their employee handbook.

If the company offers unlimited vacation as a benefit, you may be able to negotiate a higher severance in other areas to compensate for the "loss" of vacation time.


Full-time employees can receive medical insurance and other employer-sponsored health benefits for several months after being laid off.

If you pay a premium each month, you may be able to have your employer pick up the tab while you look for new work.

After your health insurance expires, you may enroll in COBRA to extend your health coverage until you find a new policy. In this case, you'd pay out of pocket each month.

Liability release

Your severance agreement might include a clause releasing your former employer from liability.

This means that future labor disputes against the company, like wrongful termination lawsuits or harassment claims, can't be brought up after you leave.

NDAs (Nondisclosure)

Some severance agreements offer compensation for a signed NDA. Nondisclosure agreements usually involve not sharing company secrets with competitors or the public.

NDAs are very common clauses in severance agreements. Don't be surprised if the company doesn't want you talking badly about them or sharing their information.

Employee references or referrals

Check your agreement to see if you can still use this employer as a reference. You'll also learn if you can talk to former coworkers for job referrals for your new job.

Being able to ask for references from the company will help you immensely when you reenter the job market—fight for it!

Stock options

Do you have stock options with your company that aren't fully vested? The severance package might outline when you can exercise them.

As with other benefits, you can seek a better severance package if you lose stock options you earned over the years.


If you worked at a startup or a company in Silicon Valley, you might have equity in the company. If you do, it was very likely outlined in your employment contract. Not all equity is created equally, though!

Review your employment contracts to see what happens to your equity after you're let go.

Talking to a lawyer might help you better understand your equity agreements. The employer will not be able to discuss the value or risk of your equity with you.

Outplacement services

Some companies offer outplacement resources to help you find a job and develop your skills.

Step 2: Wait Before Signing the Papers!

Employers want the layoff process to go quickly. After all, they're the ones who made a big decision to let go of workers! They may encourage you to try and sign your severance papers right away.

The meeting where they give you the paperwork will likely be uncomfortable. But you should wait before you sign!

When you find out you're being let go, it's hard to make financial decisions. Take some time to process the layoff before accidentally signing away important rights.

Talk it over with your partner or a lawyer to see if there are any missing benefits or opportunities. Protect yourself before walking out the door for good.

Step 3: Double-Check Everything for Errors and Loopholes

Severance packages are legally binding documents. Read through the paperwork a few times to get your thoughts clear.

Look up any terms you don't understand. Any information that's missing might lead to a loophole down the road.

Although being laid off isn't ideal, it's unlikely your employer has malicious intent. They probably aren't laying you off to trick you with legal loopholes later on.

That said, do your due diligence to make sure you understand all of the facets of the agreement.

Step 4. Clarify Your Career and Financial Goals

Before you start the negotiation process, try to figure out your personal or professional priorities.

Do you want to take a break to be with your family for a while before jumping into a new role? You can use your negotiation to fight for more paid healthcare benefits instead of PTO reimbursement.

But job search services may be the most impactful if you want to return to the job market.

Coming up with a reasonable severance package before you spend time going back and forth over email can keep your nerves calm.

Money isn't everything

While having extra cash in your bank account after a layoff sounds like a good cushion, it may not be the best way to lead your negotiations!

If your employer can help you find a new job, keep your health benefits longer, or even provide educational reimbursements, you may get more than asking for straight cash.

Giving out cash is hard for companies. But if you ask for extra health insurance or stock options, they may be more open to negotiating.

Be reasonable

Choose a reasonable counteroffer to improve your negotiation chances. Consider what your former employer can reasonably offer.

Employers don't want to negotiate for long. It's an added step between where they are now and where they envision the company moving. So if your request isn't too crazy, they might just accept it and move on.

Look on sites like Blind to see what others ask for with their severance.

Step 5: Talk to a Lawyer or an Expert

It should go without saying, but you should review your severance package with someone else.

Talk to other mentors or colleagues in the tech space. How did they negotiate severance in the past?

You may want to involve a lawyer if your package has a non-disclosure or non-compete clause. Depending on your state's labor laws, these clauses may not be legal or enforceable.

You don't have to sign!

Don't sign a severance agreement if the negotiation doesn't go well!

If nondisclosure clauses limit your job search, you may prefer to leave without severance pay.

Before negotiating, know your hard limits. Stick to them if your employer is unresponsive and doesn't want to negotiate.

If you think you've been wrongfully terminated, talk to a lawyer. They'll help you navigate your severance agreement and create a plan to exit.

Tips for Severance Negotiations

Here are some tips to help you get more out of your severance.

Talk to colleagues

Companies often lay off multiple employees at once. This could be because of a merger or a shift in the company's direction.

If you can, talk to coworkers, who were also let go. Know that your severance package may explicitly prohibit this. But it doesn't hurt to check!

What's the worst that could happen?

Anything can happen after you quit. Sadly, it could be a disability that prevents you from working again. Or it could be a death in the family.

Make sure these fringe cases are thought about and covered.

You should also ask, "Will I continue to receive severance pay if I get a new job before the end of the severance period?"

Lump sum severance pay

Negotiating around severance pay is difficult. As mentioned, cash is hard for companies to negotiate with.

Depending on the circumstances of the layoff, you may be able to negotiate a lump sum payment. Traditionally, companies pay severance over months.

But if the future of the company is uncertain, you might be able to get a lump sum payout regardless of how the company performs.

Seek clarity

Severance packages can be confusing. Even if you got help from a friend or a lawyer to review everything with you.

As a final step, take the time to rewrite everything that you think you understand about the document.

Anything vague or unclear should be brought up in your negotiation meeting.

The experience of negotiating severance packages will serve you well with future employers too. Although getting let go is never on your career roadmap, being prepared should be. Think about insurance coverage, taxable income, and anything else you need to discuss with human resources before you're out the door.

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