How to Negotiate a Better Severance Package (2025 Guide)

Most people don't realize that severance packages are negotiable. If you've just been laid off, you may be able to get more than the initial offer—but you need to know how to ask.

This comprehensive guide walks you through the entire severance negotiation process, from understanding your leverage to closing the deal professionally. Whether you're a first-time negotiator or experienced professional, these strategies will help you secure the best possible outcome.

First: You Have Time

Before we dive in, remember this critical fact:

• Don't sign anything on the spot. You typically have 21 days to review (45 days if you're over 40 in a group layoff, thanks to the ADEA).
• Take the paperwork home. Simply say "Thank you, I'd like to review this with my family before signing" or "I appreciate this. I'll take some time to review the details."
• The first offer is rarely the final offer. Companies typically build negotiation room into initial severance packages. HR expects that some employees will negotiate, and they budget accordingly.

This waiting period isn't just a legal formality—it's your window to assess, research, and negotiate. Use it wisely. Many people make the mistake of signing immediately out of shock, gratitude, or fear. Resist this impulse. Taking time to negotiate is not only your right, it's expected.

Understanding Your Leverage

Before you begin negotiations, you need to understand what leverage you have. Leverage isn't about threats or hostility—it's about recognizing your value and the company's motivations.

Sources of Leverage

Institutional Knowledge
If you're the only person who knows how critical systems work, understands key client relationships, or has essential project knowledge, this is valuable leverage. Companies know that hostile departures can be costly. Your willingness to document processes and ensure smooth transitions has real value.

Transition Support
The more the company needs your help during transition, the more negotiating power you have. This might include training your replacement, completing documentation, or finishing critical deliverables. Be prepared to offer specific transition assistance in exchange for improved terms.

Legal Concerns
If you have potential legal claims—discrimination based on age, race, gender, disability, or retaliation for whistleblowing—the company may offer better severance in exchange for a broad release. This doesn't mean making threats, but if you believe you were laid off for discriminatory reasons, consult an attorney before signing anything.

Tenure and Performance
Long-tenured employees with documented excellent performance have natural leverage. If you've been with the company for many years, received awards, promotions, or consistently high reviews, these facts strengthen your negotiating position.

Comparative Treatment
If you know that colleagues in similar positions received better packages, this is powerful leverage. Companies want to avoid claims of unfair treatment. Document what you know about others' packages, even if it's just rumors—it's worth investigating.

Industry Standards
Research what's typical in your industry and role level. If you're a senior engineer at a tech company, certain severance standards apply. If you're in finance, there are different norms. Knowing these standards gives you objective benchmarks to reference.

Assessing Your Situation

Ask yourself:

• How badly does the company need my cooperation during transition?
• Do I have knowledge or relationships that would be costly to lose?
• What's my documented performance record?
• Are there any potential legal issues with my layoff?
• What have I heard about other severance packages?
• How does this offer compare to industry standards?

What's Typically in a Severance Package?

Standard severance packages may include:

Component	Typical Amount
Severance pay	1-2 weeks per year of service
Health insurance	1-3 months COBRA paid or subsidized
Unused PTO	Paid out (sometimes required by law)
Bonus	Prorated or full, if earned
Stock options	Extended exercise window
Outplacement services	Resume help, career coaching
Reference	Neutral or positive reference agreement

These are just starting points. Everything on this list is potentially negotiable, and we'll cover exactly how to negotiate each element.

What Can You Negotiate?

Almost everything is potentially negotiable. Focus on these areas based on your priorities and leverage:

1. Severance Pay Amount

Standard: 1-2 weeks per year of service

What to ask for:

• Additional weeks based on tenure and seniority
• Matching what you've heard others received
• Enough time to realistically find a new job in your field (tech jobs might take 3-6 months; specialized roles even longer)
• Consideration for performance, awards, and contributions

The Math:
If you've been with the company for 8 years and they're offering 2 weeks per year (16 weeks total), you might ask for 3 weeks per year (24 weeks), especially if you're senior, have institutional knowledge, or market conditions are challenging.

Script:

"Given my [X years] of service and contributions to [specific achievements like launching Product Y or growing Team Z], I was hoping we could discuss extending the severance to [X weeks]. I understand the company is going through changes, and I want to transition professionally while ensuring adequate time to find a role at my level. Would [X weeks] be possible?"

2. Health Insurance Coverage

Standard: COBRA information only (you pay full cost, typically $600-$2,000/month for family coverage)

What to ask for:

• Company pays COBRA premiums for 3-6 months
• Lump sum equivalent to 6 months of COBRA costs (often easier for accounting)
• Extended coverage through end of month plus additional months
• Subsidy program where company pays 50-75% and you pay the rest

Why This Matters:
COBRA is expensive. A family plan can cost $1,500-$2,000 per month. For many people, this is the most important negotiation point because it represents substantial out-of-pocket costs during unemployment.

Script:

"Health insurance is my biggest concern right now, especially with [family situation/medical needs]. Would the company consider covering my COBRA premiums for [3-6 months] while I search for new employment? Alternatively, I'd accept a lump sum equivalent that I could put toward healthcare costs."

3. Bonus and Commission

Standard: Forfeited if not yet paid

What to ask for:

• Prorated bonus for time worked this year
• Full bonus if you're close to the payout date
• Commissions on deals you closed or influenced
• Recognition that you met your goals before the layoff

The Argument:
You worked all year toward these goals. The layoff wasn't performance-related. It's reasonable to ask for compensation you earned, even if the formal payout date hasn't arrived.

Script:

"I understand my bonus wouldn't typically pay out until [date], but I worked toward these goals all year and [met/exceeded] my targets before the layoff. Would the company consider a prorated bonus for the work completed? I contributed to [specific results] that directly impacted this year's performance."

4. Stock Options/Equity

Standard: 90 days to exercise vested options

What to ask for:

• Extended exercise window (12-24+ months)
• Acceleration of unvested shares
• Clarity on what happens to RSUs and performance shares
• Fair treatment if options are underwater

Why This Matters:
Exercising stock options can require tens or hundreds of thousands of dollars—money you may not have while unemployed. The standard 90-day window can force you to forfeit valuable equity or make risky financial decisions.

Script:

"I have [X number] of vested options that I'd like to exercise, but I may not have the cash to do so within 90 days while searching for a new role. Would the company consider extending my exercise window to 12-24 months? This would allow me to make a thoughtful decision without financial pressure."

5. Non-Compete Clauses

Standard: Often included in severance agreements, ranging from 6-24 months

What to ask for:

• Complete removal of non-compete
• Narrower scope (specific direct competitors only, not entire industry)
• Shorter duration (6 months instead of 12-24)
• Geographic limitations (only in specific regions)
• Carve-outs for specific types of roles

The Reality:
Non-competes significantly limit your job search. In many states, they're difficult to enforce, but they still create legal risk and cause potential employers to avoid hiring you. You have every right to negotiate these terms.

Script:

"I'm concerned the non-compete clause may significantly limit my job search, especially since my expertise is specialized. Would the company consider [removing it entirely / limiting it to direct competitors in [specific market] / reducing the duration to 6 months]? I'm happy to agree to strong non-disclosure terms to protect confidential information."

6. Reference and Recommendation

Standard: Company may only confirm dates and title

What to ask for:

• Positive reference from your direct manager
• Agreed-upon language for reference inquiries
• LinkedIn recommendation from manager or skip-level
• Written recommendation letter on company letterhead
• Confirmation that you were laid off due to restructuring (not performance)

Why This Matters:
Future employers will call. What they hear matters enormously. Having agreed-upon positive reference language protects your reputation and job search.

Script:

"Could we include reference language in the agreement? I'd appreciate having [manager name] provide a reference, or at minimum, an agreed-upon statement confirming my departure was due to restructuring and that I was a valued employee in good standing. A LinkedIn recommendation would also be helpful."

7. Outplacement Services

Standard: Sometimes included, often basic or not offered

What to ask for:

• Professional outplacement services (3-6 month programs worth $3,000-$10,000)
• Career coaching sessions with executive coach
• Resume writing services from professional writer
• Interview preparation and practice
• Cash equivalent if you don't want services (use it for networking, courses, etc.)

Script:

"Would the company be willing to include outplacement services? I'd like professional help with my job search, including resume writing and coaching. I know this is a standard part of many severance packages. Alternatively, I'd accept a cash equivalent if outplacement isn't available through your usual vendors."

8. Announcement and Timing

Standard: Company controls all messaging

What to ask for:

• Input on internal announcement language
• Ability to send your own goodbye message to colleagues
• Delay of announcement to give you time to network and inform key contacts personally
• Agreement that it's communicated as a layoff due to restructuring, not termination for cause
• Ability to schedule exit on your terms (end of month, after project completion, etc.)

Script:

"I'd like to have some input on how my departure is communicated internally and to clients. Could we agree that it will be described as a layoff due to restructuring? I'd also appreciate the opportunity to send a brief goodbye message to my team and key contacts. This will help me maintain professional relationships that benefit both my career and the company's reputation."

How to Negotiate: Step by Step

Step 1: Review the Offer Carefully

Read every single word of the severance agreement. This is a legal contract. Look for:

• What you're giving up: Release of claims (what legal rights are you waiving?), non-compete terms, non-disparagement clauses, confidentiality obligations
• What you're getting: Exact pay amounts, payment schedule, benefits continuation, services provided
• Deadlines and conditions: When must you sign? When do you receive payment? What conditions apply?
• Ambiguous language: Anything unclear should be questioned and clarified

Make a list of questions about anything you don't understand. There are no stupid questions when it comes to legal agreements affecting your financial future.

Step 2: Research What's Reasonable

Find out:

• What others at your company received in this layoff or previous ones (ask trusted colleagues, check Blind, Fishbowl, or industry forums)
• Industry standards for your role, level, and tenure (search "[your industry] severance packages" or consult with recruiters)
• What leverage you might have (see the leverage section above)
• Current job market conditions in your field (if jobs take 6 months to find, asking for 6 months severance is reasonable)

This research gives you objective data points to reference during negotiations. "I've learned that the industry standard for senior engineers is X" carries more weight than "I think I deserve more."

Step 3: Prioritize Your Asks

Don't ask for everything on the list above. You'll seem unreasonable and may get nothing. Instead, identify your top 2-4 priorities:

Tier 1: What do you NEED?
These are your must-haves. Health insurance if you have medical conditions. Extended severance if you're in a tight job market. Non-compete removal if it blocks your entire industry.

Tier 2: What would be NICE to have?
Things that would help but aren't deal-breakers. Outplacement services, bonus payout, reference letter.

Tier 3: What's a STRETCH?
Long-shot requests that would be great but you don't expect to get. You might include one stretch request as a negotiating anchor.

Focus your energy and negotiating capital on Tier 1 and 2.

Step 4: Make Your Case Professionally

When you negotiate, remember these principles:

Be Professional and Courteous
You're more likely to get what you want if you're pleasant to work with. Thank them for the initial offer. Express understanding of the company's situation. Frame requests as collaborative problem-solving, not demands.

Focus on Value and Contributions
Reference specific achievements, years of service, positive performance reviews, and value delivered. "Given that I launched Product X which generated $Y revenue and received excellent reviews for Z years" is persuasive.

Make Reasonable Requests
Ask for things within the realm of possibility. Don't ask for 2 years of severance if you worked there for 2 years. Don't ask for $50,000 in outplacement services. Stay within industry norms.

Offer Justification
For each request, explain why. "I'm asking for extended COBRA coverage because I have a family of four and a child with ongoing medical needs" helps them understand and advocate internally for your request.

Provide Transition Support
Offer something in return. "I'm happy to create detailed documentation and train my replacement" or "I can make myself available for questions during the transition period" shows good faith.

Communicate in Writing
Email is your friend. It creates a record, allows you to craft your message carefully, and gives them time to review and respond thoughtfully. Phone calls should be followed up with written confirmations.

Step 5: Navigate the Response

After you make your requests, several things might happen:

They agree: Get it in writing. Have the severance agreement amended to reflect all negotiated terms before signing.

They counter-offer: Evaluate whether it meets your Tier 1 needs. You can accept, counter again (carefully), or walk away.

They say no: Ask if there's flexibility on other items. "I understand the severance pay can't be extended. Would there be flexibility on COBRA coverage or outplacement services?"

They go silent: Follow up after a few days. "I wanted to check if you had a chance to review my requests. I'm happy to discuss these points at your convenience."

Step 6: Get Everything in Writing

This bears repeating: Any agreed-upon changes must be added to the severance agreement in writing before you sign.

Don't accept verbal promises. Don't accept side letters that aren't incorporated into the main agreement. Everything should be in the formal severance document that you sign.

Review the amended agreement carefully to ensure it includes all negotiated terms exactly as discussed.

Sample Negotiation Email

Here's a comprehensive template you can adapt:

Subject: Severance Agreement Discussion

Dear [HR Contact/Manager],

Thank you for the severance offer and for giving me time to review it. I appreciate [company's] approach to this difficult situation and the [X years] I've spent contributing to the team's success.

After careful consideration, I'd like to discuss a few items before signing:

1. Severance Pay: Given my [X years] of service, [senior role/significant contributions including specific examples], and the current job market for [your role type], I'm hoping we could extend the severance to [X weeks]. Industry standards for [your level] typically range from [X-Y weeks], and this would align with those norms.

2. Health Insurance: I'd like to request that the company cover COBRA premiums for [3-6 months] to help during my transition. With [family situation], health coverage is my primary concern during this period.

3. [Third priority - could be bonus, non-compete, outplacement, etc.]: [Specific request with justification]

I'm committed to a smooth transition and am happy to [specific transition support you'll provide, such as documenting processes, training replacement, completing project X, being available for questions]. I want to ensure my departure leaves the team well-positioned for continued success.

I'm available to discuss these points at your convenience. I appreciate your consideration and hope we can reach terms that work for both sides.

Thank you,

[Your name]

Reviewing Severance Agreements: Key Sections to Examine

When you receive a severance agreement, pay special attention to these sections:

Release of Claims

This section says you're giving up the right to sue the company. Read it carefully:

• What claims are you releasing? (Usually all claims, known and unknown)
• What time period does it cover? (Usually entire employment period)
• Are there exceptions? (Some claims like workers' comp or unemployment can't be released)

If you believe you have legitimate legal claims (discrimination, harassment, wrongful termination), consult an attorney before signing this release.

Consideration Period

• How long do you have to review? (Should be 21 days, or 45 if over 40 in group layoff)
• How long can you revoke after signing? (Should be 7 days)

Never waive these time periods unless absolutely necessary.

Payment Terms

• Exactly how much will you receive?
• When will payments be made? (Lump sum or installments?)
• Are payments contingent on anything? (Signing additional documents, cooperation, non-compete compliance?)
• How will taxes be handled?

Non-Compete and Non-Solicitation

• How long does it last?
• What geographic area does it cover?
• What specific activities are prohibited?
• What happens if you violate it?
• Is it reasonable under your state's law? (Some states like California rarely enforce non-competes)

Non-Disparagement

• Are you prohibited from saying negative things about the company?
• Is it mutual? (Does the company also agree not to disparage you?)
• What are the consequences of violation?

Confidentiality

• What information must you keep confidential?
• Does this include the existence and terms of the severance agreement?
• Are there exceptions for your attorney, spouse, tax advisor?

Return of Property

• What must you return? (Laptop, phone, files, documents)
• By when?
• What happens to your personal files?

Cooperation Clause

• Are you required to cooperate with ongoing matters, litigation, or transitions?
• Will you be compensated for this time?
• What's the scope of cooperation required?

Common Pitfalls to Avoid

Learn from others' mistakes:

Signing Too Quickly

The biggest mistake people make is signing immediately out of shock, fear, or misplaced gratitude. You almost always have time to negotiate. Use it.

Not Reading the Entire Agreement

Severance agreements contain important details in every paragraph. Read it all. If you don't understand legal language, ask for clarification or hire an attorney to explain it.

Accepting Verbal Promises

"Don't worry, we'll give you a good reference" or "We'll extend the health insurance" means nothing unless it's in the written agreement. Get everything in writing.

Making Threats

Don't threaten to sue, go to the press, or badmouth the company unless you're truly prepared to follow through and burn bridges. These tactics usually backfire. Negotiate professionally and focus on positive outcomes.

Comparing Yourself Publicly

Don't send an email saying "I heard John got 6 months and I only got 3." This puts John in an awkward position and makes you look petty. Instead, reference industry standards or say "I understand that employees at my level typically receive X."

Negotiating in Anger

You may feel angry, betrayed, or shocked. That's normal. But negotiate from a calm, professional mindset. Write your email, then wait 24 hours and re-read it before sending. Remove emotional language and focus on facts.

Ignoring Tax Implications

Severance is taxable income. A lump sum might push you into a higher tax bracket. Sometimes installment payments are better. Consult a tax professional if the amount is substantial.

Not Consulting an Attorney

For significant severance packages (more than a few months' pay) or complex situations (potential discrimination claims, restrictive non-competes), the few hundred dollars for an attorney consultation is money well spent.

Forgetting About Unemployment

In most states, severance doesn't prevent you from filing for unemployment, though it might delay when benefits start. Check your state's rules. Don't let HR convince you otherwise if it's not true.

Burning Bridges

Your industry is smaller than you think. The HR person you're negotiating with might work somewhere you want a job in five years. Your manager might become a key reference. Stay professional and gracious throughout negotiations, even if you don't get what you want.

When to Involve a Lawyer

Consider consulting an employment attorney if:

• The severance is substantial (multiple months of pay or high dollar amounts)
• You're releasing significant potential claims (you believe the layoff involved discrimination, retaliation, or wrongful termination)
• There's a restrictive non-compete that significantly impacts your ability to work in your field
• You're over 40 (you have special protections under the ADEA)
• The agreement is complex or confusing (lots of legal language you don't understand)
• You suspect discrimination or retaliation (based on age, race, gender, disability, pregnancy, whistleblowing, etc.)
• You're a senior executive (executive severance often involves complex equity, deferred compensation, and restrictive covenants)
• The company is pressuring you to sign quickly (this is a red flag)

Many employment attorneys offer free initial consultations and can review your agreement for $500-$1,500. This is often worthwhile for severance packages worth $20,000+.

What If They Say No?

Sometimes the company won't budge on your requests. This doesn't mean you failed—it means you hit their limit. You have options:

Accept the Original Offer

Remember, severance isn't guaranteed by law in most cases. If the offer is reasonable and the company won't negotiate, accepting it is often the smart choice. You tried, and now you're free to move forward.

Ask for Something Else

If they won't increase severance pay, ask about health insurance coverage, outplacement services, or reference letters. Sometimes they have more flexibility on lower-cost items.

Ask Why

"I understand you can't extend the severance pay. Can you help me understand the constraints? Is there anything else you have flexibility on?" This might open new options.

Walk Away (Rarely Advisable)

In rare cases, you might choose not to sign—especially if the non-compete is so restrictive it prevents you from working, or if you have strong legal claims worth more than the severance. Consult an attorney before taking this path.

Remember: A severance package isn't guaranteed. If negotiations fail entirely, you may still want to sign and move on. Having some severance is almost always better than having none.

Your Negotiation Leverage Points: A Summary

You may have more leverage if:

• You have knowledge critical to ongoing projects or business operations
• You're needed for transition, training, or handoff
• There are potential legal claims related to your termination (discrimination, retaliation)
• You're being asked to sign a broad release of significant claims
• Others in your position received more favorable terms
• You're a long-tenured employee with documented excellent performance
• You have specialized expertise that would be costly to lose
• There's been inconsistent treatment in how layoffs were handled
• You have client relationships or institutional knowledge
• The non-compete being requested is particularly restrictive

Quick Reference: What to Ask For (In Priority Order)

Highest Value Requests:

1. More severance pay (additional weeks or months)
2. Extended health insurance coverage (3-6 months of COBRA paid)
3. Removal or modification of non-compete clause

High Value Requests:
4. Prorated or full bonus payment
5. Extended stock option exercise window (12-24 months)
6. Positive reference commitment in writing

Valuable But Lower Priority:
7. Professional outplacement services
8. Input on departure announcement and timing
9. Equity acceleration or RSU treatment
10. Written recommendation letter
11. Extended transition period at full pay
12. Payment for accrued vacation/PTO beyond minimums

Final Thoughts

Negotiating severance feels uncomfortable, especially when you're processing the shock of a layoff. But it's completely normal, expected, and often successful.

Companies build negotiation room into their initial offers. HR professionals expect that some employees will negotiate. The worst they can say is no—and often they say yes, at least partially.

Remember these key principles:

• You have time. Use it to research and prepare.
• Everything is potentially negotiable. Focus on your top priorities.
• Be professional and collaborative, not adversarial or threatening.
• Get everything in writing before signing.
• Consult an attorney for complex situations or substantial packages.
• Your goal is a fair outcome, not to punish the company.

You've earned the right to advocate for yourself. You contributed to this company for months or years. Asking for reasonable terms during your departure isn't greedy or ungrateful—it's appropriate and professional.

Be reasonable, be prepared, and be confident. You've got this.

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Related Resources:

• Severance Agreements: What to Know Before You Sign →
• WARN Act: Your Rights to 60 Days Notice →
• What to Do When Laid Off
• First 24 Hours Checklist
• Understanding Your Legal Rights