What Is a Severance Package?
A severance package can be simply defined as financial compensation given to an employee on the understanding that their contract has been terminated. This is not a legal requirement, however some companies have several motives for offering a severance package. They may be offered in the hopes that they are less likely to be the recipient of a lawsuit, to convince the employee that the company is professional and reasonable, because it’s standard practise, or just a genuine act of fairness and kindness.
Why Companies Should Consider Offering Them
Severance packages can be very influential in determining a company’s reputation. It is seen as a serious benefit to working for a company, but also instrumental in how customers see you too. Inadequate employee treatment tends not to sit right with customers who are engaging with your company. Offering a severance package shows that the company is willing to support employees, especially during today’s financial climate.
Evaluate Fairness
It is highly advised that you secure legal help in evaluating the fairness of your severance package. Severance package reviews done by a professional will be able to give you an honest assessment of your entitlement, and whether the money that has been offered equates to the years of hard work that you have achieved. If you do not want to enlist the help of a professional, then you are well within your rights to make your own judgement on whether you believe the value of the severance package to be fair.
Recognition for Hard Work
As previously mentioned, severance packages are not an essential legality. It is between the company and the employee to come to an understanding that this money is an offer made as a personal company decision, in order to terminate their contract. While it is easy to be offended by such an offer and immediately dismiss it, you should consider reframing your mind to think of it as a genuine reward for your years of employment, particularly if you are not fully happy in the company. By changing your attitude towards the offer, you can start to think of it as a positive ending and look towards achieving your new goals.
Carefully Read the Fine Print
Employers can be sneaky when trying to terminate your contract. Be smart about how you approach any legal contracts that come with accepting severance pay and ensure that you are well-informed on your rights. For example, a confidentiality clause can restrict you from speaking out against your corrupt employer, leaving you to weigh up whether it’s more important to accept the money or speak your truth.
Room for Negotiation
There may be room to negotiate with your severance package, but be realistic about it. Above all, it is a gift from the company, so you do not want to show an arrogant audacity. However, that does not mean you shouldn’t fight for what you are entitled to. Insurance coverage could be a massive cause for concern, so you will want to ensure that you are knowledgeable about what the severance package is offering for that. You could even ask for other benefits that are not unreasonable, such as a letter of recommendation or services to aid you when seeking your next employment.
The Threat of Discrimination
For companies, introducing severance packages may come at a disadvantage to their reputation. If they, for example, offer a severance package to one employee but not another (of the same position), this could be taken as serious discrimination. In a world where over a third of UK adults have suffered workplace discrimination, severance packages could be seen as borderline favouritism unless there is an egalitarian method of discerning who can be offered the severance packages.
Think to the Future
Your company might have a particular way of offering severance pay that is non-negotiable, i.e., either a lump sum or a series of payments. Have an honest conversation with yourself on whether the system of your company would align with the way that you you’re your life. Many factors can determine whether annuity or lump sum is better for you, including your age, spending habits, and your investing capabilities.
Final Thoughts
Accepting a severance package is a big decision- and not one to be taken lightly. There are many factors to consider, including your present financial and life situation, fairness of the offer, and whether it will honestly suit the stage you are currently at in your life. It is highly recommended to employ a legal professional to look over the fine print, but if you don’t, ensure that you think carefully and research thoroughly to hopefully reach the result that works best for you.
