The Severance Negotiation Playbook

"You're being let go. The shock is real, but this is also a negotiation—and most people leave money on the table because they don't know what's possible."

The Reality of Severance

When you're being laid off or pushed out, you're in a negotiation whether you realize it or not. The first offer isn't the final offer. Companies have budgets and flexibility they don't advertise.

But most people sign the first thing put in front of them because they're shocked, embarrassed, or just want it to be over.

Don't be most people.

What's Actually Negotiable

Almost everything is negotiable in a severance package. Here's what's typically on the table:

Cash Severance

• 1-2 weeks per year of service (common for individual contributors)
• 1 month per year of service (more common for senior roles)
• Fixed amounts for executives (3-12 months is typical)

• More weeks/months than offered
• Inclusion of bonus in the calculation (if bonus is significant)
• Payment as a lump sum vs. salary continuation (tax implications differ)

Benefits Continuation

• Extended benefits coverage beyond the severance period
• Company-paid COBRA for a fixed number of months
• Outplacement services (career coaching, resume help)

Equity and Vesting

• Acceleration of unvested equity (partial or full)
• Extended exercise window for options (90 days is standard, but you can ask for longer)
• If the company is close to an exit, a payout on unvested shares

References and Narrative

• A neutral or positive reference letter
• Agreement on what will be said to future employers
• Agreement on internal/external messaging about your departure
• Removal of any performance-related documentation

Non-Compete Modifications

• Reduction in scope or duration
• Specific carve-outs for companies you want to join
• Elimination entirely (in exchange for less severance, sometimes worth it)

Timing

• Delayed termination date (helps with vesting cliffs, bonus eligibility)
• Lump sum payment vs. salary continuation
• Timing that works for your job search or personal situation

When You Have Leverage

You have more leverage than you think if any of the following are true:

• You have institutional knowledge that's hard to transfer
• You're being asked to sign a non-compete (they want something from you)
• The departure is their choice, not yours (they have more to lose from a messy exit)
• There are potential legal claims (discrimination, harassment, retaliation, etc.)
• You were promised things that weren't delivered (verbal offers, promotion commitments)
• You're willing to walk away from their first offer and take more time

The company is offering you money to sign a release of claims. That release has value to them. Make sure you're compensated appropriately.

The Negotiation Process

Step 1: Don't Sign Anything Immediately

You'll likely be presented with a severance agreement on the spot or shortly after. You don't have to sign it right away.

What to say: "Thank you for walking me through this. I'll need some time to review everything. What's the timeline for getting back to you?"

Most agreements give you 21 days to consider (45 days if you're over 40 due to ADEA requirements). Use at least some of that time.

Step 2: Review the Agreement Carefully

• The release language (what claims are you giving up?)
• Non-disparagement clauses (are they mutual?)
• Confidentiality provisions
• Non-compete or non-solicit terms
• Cooperation requirements
• Clawback provisions

If the package is significant, have an employment attorney review it. The cost ($500-1500) is usually worth it.

Step 3: Identify Your Asks

Decide what matters most to you and prioritize. You probably won't get everything, so know what's essential.

1. Must-haves (deal-breakers if not included)
2. Important (push hard for these)
3. Nice-to-haves (ask, but don't die on this hill)

Step 4: Make Your Counter

Request a call or meeting to discuss the package. Come prepared with specific asks.

The script: "Thank you for the offer. I've reviewed it and I'd like to discuss a few adjustments. Given my [tenure/contributions/circumstances], I believe [X] would be more appropriate. I'm also asking for [Y] and [Z]."

Be specific. Don't just say "more"—say "six months instead of three."

Step 5: Get It In Writing

Any changes should be reflected in a revised agreement. Don't rely on verbal promises.

Common Negotiation Mistakes

Mistake 1: Negotiating from Emotion

Mistake 2: Accepting the First Offer

Mistake 3: Not Understanding What You're Signing

Mistake 4: Burning Bridges

Mistake 5: Forgetting About Non-Cash Items

A Real Example

The situation: A Director of Marketing was laid off in a restructuring. Initial offer: 6 weeks of severance, COBRA for 2 months, 90-day exercise window on options.

• She asked for 12 weeks (based on 5 years of tenure and consistently strong performance)
• She asked for 6 months of COBRA (citing the difficulty of finding equivalent coverage)
• She asked for a 12-month exercise window on options (the company was pre-IPO)
• She asked for a written reference from the CEO

• 10 weeks of severance (compromise)
• 4 months of COBRA (compromise)
• 6-month exercise window (compromise, but better than 90 days)
• Reference letter agreed

She got more than 60% above the initial offer by simply asking. The entire negotiation took two emails and one phone call.

When to Get a Lawyer

Consider involving an employment attorney if:

• The package is substantial (more than 3 months of pay)
• You have unvested equity worth significant money
• You suspect discrimination, harassment, or retaliation
• You're being asked to sign a broad non-compete
• The departure circumstances are contentious
• You're a senior executive with complex agreements

The cost is usually a few hundred to a few thousand dollars. For a significant package, it's worth it.

What You'll Walk Away With

When you negotiate your severance properly, you get:

• More money than the initial offer (in most cases)
• Better terms on benefits, equity, and non-competes
• A clear narrative for what you'll say about your departure
• Written references you can rely on
• Time to job search without financial panic

The goal isn't to extract maximum value at all costs. It's to ensure you're treated fairly and have the runway you need for your next chapter.