This article will teach you how to negotiate a severance package and break free from a job you dislike. Life is too short to keep doing something that brings you no meaning, purpose, or happiness.
I am the bestselling author of How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye. The book is the most comprehensive book that teaches you how to negotiate a severance. Negotiating a severance was my #1 catalyst to leave my six-figure investment banking job in 2012.
If you want a severance, the main thing you must do is not get fired or quit your job. Instead, get laid off. If you quit or get fired, you get no benefits, such as unemployment or health insurance. But if you get laid off, you can receive a severance payment, unemployment benefits, subsidized health insurance, strong referrals, and so much more.
A baby panda dies in the woods every time you quit your job or get fired. It is so much better to negotiate a severance and leave on your own terms with money in your pocket!
Big Difference Between Laid Off And Fired
First of all, there's a big difference between getting fired and getting laid off. In addition, there's a significant difference between a person who gets laid off by surprise versus someone who is able to negotiate a severance.
Most of what you read in the papers is about people getting laid off due to a “reduction in force,” or RIF as many companies call it nowadays. Getting fired is almost always due to cause.
You may have sent out a blast e-mail with company secrets by mistake. Or perhaps you said some sexist joke about women when the female HR manager so happened to walk by. Whatever the case, you don't want to get fired, nor should you quit if you don't have to.
People don't get fired because there's a big recession and the CEO says 10% of its employees must go. People don't get fired when there is a reorg. These people are getting laid off without cause. As a result, a severance is often given.
Reasons Not To Quit Or Get Fired
The vast majority of workers quit their jobs when they want to start a new job, go back to school, etc. Most people don't think there's any other way. It's a herd mentality.
On the other hand, those who learn how to negotiate a severance are open minded individuals. They are not afraid to think outside the box. To help explain why it's not ideal to quit or get fired, here are some unexpected negatives.
If You're Fired Or Quit, Many Bad Things Can Happen
1) You will not be eligible for any unemployment benefits. The logic behind this is simple. You did something wrong that forced your company to fire you. Or you voluntarily quit your job. Hence, it is your own fault you are unemployed!
2) You might have a black mark on your record if you are fired. Word can travel fast. Thus, you'll likely be passed over by future employers. No firm wants to risk hiring someone who was previously fired.
3) You may lose supporters and mentors who would have otherwise written letters of recommendation for you. They might not want to risk their reputation on quitters or miscreants.
4) You might die alone. Few things in life are worse than dying alone. If you don't have a job and don't have a backup plan, who will want to be with you for the long term?
Get Laid Off And Make More Money With A Severance
Now that you realize the downside of getting fired or quitting, you should logically seek an alternative. If you just can't stand the company you are working for anymore, figure out a way to get laid off of course!
If you want to leave your job, get “riffed” and negotiate a severance package. Don't just quit and walk away with nothing. Cashing out smartly is the way to go.
Here are some of the main reasons why it's beneficial to negotiate a severance and ask to get laid off.
Reasons To Negotiate A Severance
1) Getting laid off makes you eligible for government unemployment benefits. Here in San Francisco, you can get up to $450/week for 26 weeks.
2) You may get severance. Many companies offer one to three weeks per every year worked. Please note that severance is completely discretionary. It is not required by law.
3) If you have deferred compensation in the form of stock or cash, you are eligible to receive these assets during the scheduled time table. For example, my friend will lose ~$400,000+ in deferred compensation if he quits!
4) You can get all your unused vacation days paid. You may even receive unused sick days, albeit rare. But if you quit there's no guarantee you'll get them.
5) You will have no black marks on your employment record. This is key if you want to get back into the game at a future time.
6) You can get COBRA (healthcare) for 1 month and often 3-6 months fully paid by your employer. Legally, most companies must provide access to COBRA for 18 months after separation. You may have to pay the monthly premiums after the initial grace period, but it all depends on how well you negotiate.
7) Even if you get mandatory WARN Act pay and a severance package, you are eligible for unemployment benefits, so don't delay filing once laid off. Some people erroneously wait until after their WARN Act pay runs out before applying for unemployment benefits. Apply immediately.
How To Get Laid Off With A Severance
Let's say you've been working at your company for five years, and you've decided selling vacuum cleaners no longer interests you. You are a bit burnt out, and you wish to take a three month break in between jobs to recharge.
You can't just quit because you'll lose out on 10 weeks of severance pay. In addition, you won't be able to receive unemployment benefits or health care.
Instead, negotiate a severance package and get paid to take your three month break.
Steps To Negotiate A Severance
Here are some ways and thoughts to get laid off:
1. Google “WARN notification your state”
Then search by your company. WARN stands for “Worker Adjustment and Retraining Notification” where a company legally must file with the state if they plan to do a mass layoff.
The goal is to provide potentially laid off workers time to adjust to a job loss (2 months in California, 3 months in New York for example).
2. Talk to your manager about the company's staffing levels
“Bloated, lean, just about right?” Basically tell her that you empathize with how difficult her decision must be to lay people off, and ask how she copes?
As the dialogue ensues, bring up a suggestion that you are willing to sacrifice your position for the good of the firm if she is asked by senior managers to choose people to layoff.
This way, you seem like a good team player. You should also make clear that with your sacrifice, you wish to receive severance and any deferred compensation you might have.
Being a manager is very difficult during rough times. If you can help managers make some difficult decisions for them, more often than not, they will accept your proposal.
If you ever wonder why C-level execs hire consultants like McKinsey for strategic reviews, now you know why. The consultants are often the scapegoats for letting go of staff, so the blame doesn't go on the big bosses.
Of course, if you are one of the top performers, they will make it difficult for you to leave, and might ask how they can help make your life better and might even give you a raise.
Quitting your job is selfish. Getting laid off is the more thoughtful way to go.
3. Bring up the topic of a sabbatical with your manager
There's never really a good time to ask for one. When things are busy and booming, the last thing the company wants is for an employee to take a nice 3 month long break.
When things are bad, your manager will think you're being thoughtless and foolish with your career. That's fine, since you want to get laid off anyway!
You can recharge and enjoy your time off, and if you get back and find yourself laid off, then what a fine choice. Here's a post that goes through the decisions on whether to take a sabbatical or not.
4. Fade to mediocrity
This is a riskier strategy that must be tactfully managed. Companies let go of their bottom 5-10% performers every year. Some call it the “Jack Welch Rule” from GE.
So long as you are one of the average 70-80% of employees, you'll likely never be let go. Falling to the bottom 10% in performance requires: not being a team player, but still being nice e.g. “Sorry, can't stay late, gotta go!“, being out of sight, not feeling you've put in your best work, and maybe even arriving 15 minutes late at times.
Be very careful not to do anything wrong. Most people at firms are mediocre, so don't feel bad. You can adopt the quiet quitting movement.
5. Become disliked, but not hated
Another strategy to get laid off with a severance is to become disliked. Are you the type of person who likes to whistle at your cubicle to the agitation of your colleagues? Do you like to bring back from breakfast or lunch the stinkiest meal possible and disgust your neighbors?
Well then, you are on the right path for getting put on the “RIF List.” I've had a couple managers tell me they can't stand someone because of their loud noises and whistles.
Because they can't stand that person, the manager finds nitpicking things to justify a RIF. As the annoying person, you should continue to be nice and smile. Just be a little oblivious.
6. Use the “It's not you it's me, but really it's you” strategy.
When you're afraid to let someone down who loves you more than you love them, employing this strategy works. Here's a whole post on how you can lessen someone's pain during breakup.
Important: It's really all about planting a seed of doubt in your manager's mind. Once your manager thinks you're a pain in the ass, annoying, or not pulling your weight, you will have a very difficult time convincing him or her otherwise.
People are naturally biased and will find reasons to let you go if you sufficiently bother them. For example, if your manager is a Republican, you can mention you are going to a Democratic fund raiser. Totally legal, but you will crawl under your manager's skin to the point where all he'll think about is finding ways to legally get rid of you!
Avoid These Mistakes To Get Laid Off
Before you go out and do anything rash, make sure you know to avoid making these five mistakes:
- Do not write anything in e-mail that could condemn you to getting fired. Assume all your e-mail are read. If you are embarrassed to read your e-mail on the front page of the newspaper, the e-mail is not legitimate and should not be written.
- Do not abuse your corporate card or any channel where you can spend the firm's money. You should never abuse your corporate card anyway. All expenditure must be above board.
- Do not harass your colleagues. This is a given. Now is not the time to go hit on the hot tamale at the other end of the floor. Many companies have a non-interoffice dating policy.
- Do not come in late or leave early more than once a week. Companies can terminate you for being incessantly late, so don't slack too much.
- Read your employee handbook. There are many dangers you must avoid that are contained in the hand book.
Empower Yourself With Knowledge
Getting laid off can be a wonderful thing if you have other things planned. The better an employee you are, the harder it is for you to engineer your layoff because you are clearly more valuable to the firm than what they are paying you.
Also, if a manager lays you off, by many state laws, they can not replace you with another candidate for a certain time period because that would violate the reason for a layoff. If you are a bad employee, you should probably be fired, but that opens up reputational risk to the firm as well as litigation risk.
Getting Laid Off Has Benefits
If you are thinking about quitting your job, please at least attempt to engineer a layoff instead. You may get severance, all your deferred compensation, healthcare coverage, as well as unemployment benefits from the government.
This is real money that shouldn't be taken lightly, since there's no guarantee that after the layoff you'll succeed in whatever new thing you want to do. Besides, after all these years of paying taxes, don't you want at least some of that money back?
Although your employer pays the unemployment insurance directly on your payroll, you are still indirectly paying for unemployment through a lower wage equivalent to the tax they must pay!
Sooner or later, our careers end. If you want your career to end sooner, consider getting laid off instead of quitting or getting fired. And if you have an incredible opportunity lined up already that will pay you handsomely, go ahead and quit. Just make sure you know what you're missing if you do!
Note: It is very important to work together with your HR staff. The HR staff's main purpose is to protect the company from litigation and NOT you. Remember who pays the HR staff's compensation. Finally, a severance comes with you signing a document protecting the firm from you. In essence, a severance package is like hush money.
Here's an inside look at how HR lays an employee off. Watch the video to demystify the process.
Recommendation For A Better Life
If you enjoyed this article, I wrote a comprehensive 245-page ebook entitled, How to Engineer Your Layoff. It teaches people like you how to get laid off profitably. The book is updated for current times.
I go through the framework of how to negotiate a severance package in further detail. There are lots of case studies, negotiation tips, and guides to help you plan and execute a severance package.
Corporations have a team of lawyers and HR professionals looking out for their own interests. On the other hand, employees have to fend for themselves. I've taken in feedback from thousands of readers to make this book as impactful as possible.
How To Engineer Your Layoff is here to help those who feel they are at risk of getting let go, or who simply want to leave. Everybody whom I've coached or spoken to has said that engineering their layoff feels like winning the lottery. In my case, my lottery ticket amounts to six years of living expenses.
Use the code “savefive” at checkout to save $5.
Stay In Touch With Financial Samurai
For another example, you can see my wife's case study on high she negotiated a six-figure severance as a high-performing employee. Never quit your job, get laid off instead. You will feel like you won the lottery as you move on to do something new.
For more nuanced personal finance content, join 65,000+ others and sign up for the free Financial Samurai newsletter and posts via e-mail. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. How To Negotiate A Severance: Don't Quit, Get Laid Off is a Financial Samurai original post. All rights reserved.
I’m in a weird situation. It has been explained to me that [I will most likely be laid-off after February]. I have also spoken to an employment lawyer who has advised me to wait and see what the company does, that I should not quit or find another job. So, my immediate question, I want to follow your strategy to fade into mediocrity. I am extremely uncomfortable in the office. I have been told not to attend meetings and I am allowed to work remotely as much as I want. I feel my coworkers are talking about me behind my back, and even though the situation is not my fault, it still makes me feel like I did something wrong. I promised a small amount of independent project work between now and February, but, do I actually have to do it? Or can I skip it and wait for February? How much effort do I have to give to this miserable company between now and the end of February?
Hello there.
It’s funny how I was thinking of doing the same thing, then find years of work done on the exact topic.
A question though.. I am in my mid career with 6 YOE. I’ve been engineering to be a low performer and about to press the nuclear button to be let go. My concern is that when I get a job somewhere else, the HR may give out my information on how I was let go.
Is there a way to prevent the HR leaking my performance review to a potential new employer?
Not sure if the editor of this blog will reply to my comment, but I just pulled the trigger today. I spoke with my manager, and my manger first laughed. Then he realized that I was being serious and told me to just resign as this may look bad in the future.
I insisted that I prefer layoff and emphasized that this is a win-win for both of us.
Now I wonder how this will go. He said he will speak with others and get back to me.
You have little downside b/c they can’t fire you for cause if you didn’t do anything bad. You need to know offer your services for a smooth transition. I talk about all the strategies in my book.
Just an update.
I got a call from HR today and got terminated for cause(job abandonment) effective today. They used my use of sick days against me (and we have unlimited sick days lol). Well, HR sure can use whatever to create a cause I guess.
Not super mad as a new job is waiting for me, just little salty as I could’ve collected the pay check for another week. I am just not sure how far I am gonna take this to fight against my former asshole.
Any thoughts?
The company that I currently work with, just offeed a voluntary resignation with benefits of severance package and EI approval. I am thinking that Volunteering on it is the same as quitting? Will job loss insurance (credit card/loan protection) will consider it as quit or lay off? I am just worry that they will deny my claim, even if the Reduction in Workforce was approved by Employment Insurance…
Ask them.
You crack me up! Thanks for (living this?), culling the info, and posting.
Getting fired is not the black mark everyone makes it out to be. WHY is the tricky part. Many people get fired or terminated and unless you did something really bad, unemployment can usually be gotten, even if you have to pay $1200-$2000 for an attorney to handle the appeal.
Of course, you don’t want to make a habit of it.
Exactly! Get creative as to the why without fibbing-place as much positive in it as much as possible.
I will buy your book tonight but I have an interesting situation. I am considering negotiating a voluntary severance as I am looking at buying a business. So I might leave anyway. Of course I wont bring that up but in my roll out I think I will first just ask for a package. At some point it might be a game of chicken/poker with the company daring me to quit versus me daring to quit…
I am late 50’s and have mildly complained the last year about being excluded from higher level meetings, though recently i am now invited, so I dont think I have performance issues…
I have subscribed to your newsletter for a few years, it is really great, love every post
thanks Sam
Tech Worker
I’ve just recently found your blog and have really been enjoying reading through these posts — thank you!
As a contractor doing web development, my experience has been different – no employer paid benefits, and no deferred compensation (like stock options). It’s just me connecting those dots.
Last year, most of the work I was doing was with a specific agency. I enjoyed the company for the most part, but was getting bored and uninspired with some of the projects being thrown my way.
I considered quitting, but instead I crafted an email articulating all the ways in which I was a vital part of the organization — and as such required an extreme increase in my hourly rate.
After a bit of negotiation, they accepted. I learned that I had been undercharging for too long, but there were also a few interesting consequences:
* Because I am now so expensive, I am only being asked to do the really “hard stuff” — things that are challenging and engaging for me, as opposed to things that are just re-inventing the wheel.
* I am working less hours, but getting paid more.
* With more free time, I am able to focus on spending time with my new born son along with growing my other side projects!
I’m in a senior level management position with a large corporation. I’ve had discussions with my manager regarding future restructuring in our division. He is being tasked to reduce cost (in this case headcount) by 5% next year. It is obvious after discussing with him he will not need me in my current position under the new structure but says he will not make a decision until the year end. I’m not willing to take a step back or reduce my compensation, which looks like will be his recommendation as he considers me too highly compensated for a lower position. I’m also not willing to wait until year end. I’m considering suggesting to my manager to make me redundant so he can meet his cost savings for next year but I’d prefer he do it now opposed to year end. I have 16 years with this company and have moved over seas for them with a proven track record and good performance. Any advise or guidance you can give me will be greatly appreciated. Best regards, Robert
Hi Robert, what specific questions do you have for me regarding my book’s strategies? Thx!
Hi there!
So I’m in a sticky spot. I have a good amount of money in unvested stock. There are rumors that the company I work for may be acquiring another company (our competitor), which would make us the largest player in our space. An article I read stated that our stock could double to triple if this event were to take place. I had worked closely with one of our c-suite folks on a rather large effort when I joined the company, so I can reach out to this person anytime and it’s not a big deal. I was offered a position to the company I worked for prior to the one I’m working for now, and to add to that my former company use to own my existing company. I setup a meeting with my c-suite contact and was going to ask if I could be laid off and have my unvested stock accelerated to vest. What do you thing is the best approach to ask this. Side note, c-suite contact is retiring at the end of this year.
I just found out my job is being eliminated and I am being laid off (with a NUMBER of other employees). I am about 6 weeks pregnant. A new Maternity policy went into effect Jan 1, 2016 with 14 weeks paid, and up to 6 months of job protection. I JUST missed this policy with my first, born 9/2015. I have 8 years with the company. I receive 16 weeks severance and am being paid for those 16 weeks to help pay for COBRA. How do I ask (demand) for 14 weeks paid maternity, in addition to my package from HR, since any new Job I find (IF I can get hired while pregnant…seems like a slight chance), I will be ineligible for any decent maternity due to my short length of employment at a new company.
Do I have options? I am a female millennial, and my company implemented the new maternity policy to ATTRACT millennials, and have been pushing in all our company meetings they want more women, and more millennials! What gives?
Hi Sarah, do they know you’re pregnant? If not, you should bring it up. You have nothing to lose now since they are already laying you off. With new information, they should be flexible to change some of the terms.
what about a fake burn out ?
What would happen if you work for a company for more than 15 years and got laid off. They gave out no handbook to employees. Is there any chance that you can receive severance package? Or what do you need to do to receive it?
Please reply. Thank you
I was working for a manufacturing company since May 2015 they laid me off in September and i had signed the paper stating i was laid off. Than realize i didn’t have a reason i called the company and spoke to the lady who laid me off. I told her i needed a reason why so i can file unemployment. She told me to go back the next day to get another paper. When i go back she gives me the paper but added the reason to the one i had already signed. And the reason i didnt agree to it because i was never written up or talk to. 3 days later they rehired me and kept me for 2 months its now December and i asked for a reason why and she mentioned that she didnt need to tell me so i didn’t sign the paper. Am i suppose to be given a reason stating why im laid off?
I am no longer interested in working for my company (9 years) because my manager started to micromanaging me to the point that I feel I am being bully. Can I just go to HR and ask for a package and leave? He has two people report under him, yet, he bother me constantly and leave the other one alone (that person has tide to the VP). I feel like I am being watch on everything I do. When I worked 20 hours per day (yes, that is the correct hours) on a project, he wouldn’t bother me, now the project is over, he has nothing else to do and start to bother me. He is trying to make me quit (going through a re-org again slowly) and it’s working.
Well, I got laid off. Not by choice though. Not sure what I should do next. I have about 1MM net worth – 700k invested 300 k house. 3 kids and a stay at home wife…. Here is Canada we get a monthly child benefit of about $400…
I can collect EI for the next 10 months
I have considered calling it a day – my wife is willing to go back to work and can add about $1000 month to the pot… not sure..
[…] Related: Never Quit, Get Laid Instead […]
I work as a hotel supervisor, the hotel recently was bought by a new management company, i just had a baby 2 month ago. My boss hates me, i’ve been telling him i cant stay late because i have to take care of my baby, two weeks ago they told me since im not flexible they were letting me go or I had to accept a demotion, i have one more week to decide. I was wondering if i would still receive benefits for being let go even if a new company just bought the hotel out???
i forgot to say i’ve been with the hotel for about 3 years, but i dont know if that matters since new management company just took over
[…] and the disaster of 2008-2009. People weren’t just taking a hit on their investments. People were getting fired left and right as well. Having to sell something when you don’t have to because of a liquidity crunch is the worst. […]
I started working for an information security startup in the beginning of March (In CA) in an inside telephone sales role. After 6 weeks at the job I was pulled into a meeting with my boss in which he said I had not been performing as expected and was put on a performance plan. Now after 2 months at the job I was laid off. They gave me an unemployment brochure and a cheque for my vacation days , no severance pay. Any suggestions on next steps would be appreciated.
Unfortunately, 8 weeks on the job is not long enough to build any sort of good will. I would just apply for unemployment in the meantime while looking for another job, and discover why you think you got laid off.
Hello! I work for a small company (20-40 employees), and I am curious if your book would still be useful to someone who works for a small company.
Probably even more useful since smaller companies are more intimate and you can have easier frank conversations.
My husband was approved for leave of absence for 3 months. He worked in the company for 7+ years. Let’s wait and see the outcome.
Yes I live in jax FL I was working with a company for 8 months I’ve had back problems sense 2009 I put it on my app that I did. In 2014 my back when down on me so I had to call out about two to three days a week till I got to my doctor doc gave me a notice to stay at home for a couple weeks I turned the notice in and my Forman told me if I was unable to make it in that day to let him know so I did a week later they laid me off. That was the first week of October well October 31 I was laid off do to me not being able to work and I was under doctors note . But it is now March 5 2015 and I’m applied for disablity. Is there anything I can do to get any finance help from the company is state. I’m going to look up your book and read it and learn much as possible I’ve never have been to book smart bout this stuff Thanks my email is Damnskippy1978@gmail.com
Dear Financial Samurai,
My mom worked for this company for more than 5 years. My dad, who leaves abroad, was sick and she had to take care of him. So she told her employer that she would take some time off, leave with out pay, and even sent email with the detail. She was asked to send proof of his sickness. She couldn’t get a working fax machine to send HR the proofs. But she got it scanned and emailed it through internet service provider company. She then send the pictures of the papers to my sister. My sister emailed the HR office what she got and explained the hardship my mom is in. Then, without her presence, the HR office sent letter to my mom that the company has let her go. When she came back after a month, my mom found the letter. The letter was dated almost a month before it was stamped. Few days ago, my mom called her company and asked why they did that. They said, she can come in as a new employee if she wants. But, if she chooses not to, they told her not to enter the building and they would put her personal belongings. Is this how things should go. Since my mom doesn’t speak good English, she couldn’t express herself. Her company doesn’t talk to anyone but her. She is frustrated and crying. What do you advise? Thank you for your service by the way. Reading your site gives some kind of hope.
Confused Daughter
I’m on medical leave, if job let’s me go will I be able to get unemployment
I was on FMLA for a back, shoulder and neck injury. I used all my FMLA and now the doctor still feels i should not be back to work, my job has placed nice, and not said a whole lot as to what will happen next. I have been told that they can not continue to wait much longer for me to return. If they lay me off now, will I be able to qualify for unemployment since they have been working with me? I was suppose to be back to work on January 15,2015, and have not been released as of yet from the doctor. I am currently on Long term unemployment as well.
Have an open conversation with them and ask. It can’t hurt, since you can’t work well now.