By Suzanne Kleinberg
So you have been terminated. Assuming you haven’t been fired for just cause, your (soon-to-be- ex-) employer has handed you with an envelope with a termination package. What do you do now?
Firstly, do not sign anything until you have had a couple of days to get over the shock and humiliation. Don’t succumb to pressure from your employer to sign it during your termination meeting. They are not allowed to coerce you to agree to anything. It would not be binding as you are signing under duress.
If your employer has given you just a couple of days to sign the package and you want more time to obtain legal advice, you have the right to request a reasonable extension. Don’t fall for the employer’s threat that they will retract the offer because they won’t. Be prepared to counteroffer in writing.
When you review the offer, depending on your level in the organization, make sure you consider the following items to be included:
1. Salary Payout: Obviously you have a right to termination pay and possibly severance pay depending on your circumstances. However, there are different ways of being paid out. A lump sum option sometimes will be slightly less than the full term. Be mindful of your tax situation if your choose a lump sum. If you do choose a lump sum payment, you may increase your tax bracket for that year if you get another job quickly. The employer will only retain taxes at the level you were employed at and is not obligated to calculate your new rate. Maybe ask for a deferment until January of next year to offset this year’s taxes.
If you choose a lump sum payment, it will not shorten the time period in which you are eligible for Employment Insurance. If you get three months’ salary in a lump sum, the government will still see three months’ severance on your Record of Employment.
There also may be a provision in your agreement that stipulates that if you get a job before the severance payments are completed, you will need to return a certain portion of the severance (“Clawback”). Ask for this to be removed because if you agree to it, it is binding.
2. Benefits: Make sure that the benefits extension lasts the full term of the original severance (e.g., if you are getting a lump sum payment for three months salary, your health insurance should still last three months past your termination date). Include all the benefits you currently receive, including health benefits, life insurance, disability insurance, stock options, pension or RRSP contributions, and club memberships.
3. Bonus/Commissions: You still should be entitled to the anticipated bonus or earned commissions for the year of termination. Make sure you include them in your counteroffer.
4. Unused Vacation Pay: If you accrued vacation for the fiscal year of termination, make sure you are getting the financial equivalent for that time. This is a legal requirement.
5. On-Call or Overtime Pay: If you regularly worked on-call or overtime and expected (or were required) to do so over the termination pay period, you should request that you be financially compensated for that expectation.
6. Discounted House/Car Insurance, Travel Accommodations, or Other Perks: If your company provided these types of privileges, ask to be able to continue them for a specified time. Many large corporations provide this service for retired employees, so they may be willing to do so for a laid-off employee.
7. Business Partnership Discounts(home use software, discounted tickets, etc.) or Employee Discounts (e.g., purchasing or lowered bank fees): Ask if these privileges can be extended to you for a specified time.
8. Educational Allowance or Assistance for Retraining: If you require training to update your skills, outline what you need and present it in your counteroffer. Include costs and justifications.
9. Intellectual Property: Insist that you be able to retain samples to use in your portfolio. Will you retain credit for your creative works? If you contributed creatively to your employer’s projects, ensure that the appropriate creative credits are maintained. If royalties are due to you, ensure that they continue to come to you.
10. Positive Reference: You will need this for future job interviews.
11. Departure Statement or Public Announcement: Will you be able to review or contribute to ensure a positive spin? How a company announces your departure is critical for many people, especially in management roles.
12. Outplacement Services: Many people require professional assistance for career counseling and resumé writing. It can be expensive, so negotiate to get it included in your package if you feel you can benefit from it.
13. Technology: Can you retain computer equipment, cell phone, etc.?
14. Car: Can you retain or buy out the company car you were using until the lease expires? If so, keep in mind who will pay the insurance on it or any taxable benefit implications.
15. Non-Competition Clause: Will the employer be willing to forgo or limit a non-competition clause if it exists? Make sure this includes a time limit for solicitation of customers if your package prohibits it. Companies do not want you pilfering their customers. If this becomes a negotiation point, then narrow your focus: Perhaps current customers only? Include employees? Does it include working for a company that would be doing the solicitation?
16. Legal Expenses: Reimbursement for legal expenses to review the package.
17. Message, Mail Forwarding, Voicemail, and/or E-mail Continuation: In order to transition to unemployment, request continuation for a period of three to six months if you need it.
18. Payments Upon Death: It is hard to think about this now, but you should consider it if your severance payments are over a long period of time. You may want to establish a continuance of payments in case of your death.
19. Bankruptcy Protection: In case of the company’s bankruptcy prior to completing the payout of severance, the outstanding sum shall become an obligation of the shareholders. The same would apply to any mergers or acquisitions. In the case of a merger, acquisition, reorganization, or sell-off of assets, the company is obligated to continue your outstanding payments.
20. First Rehire Right: If you are part of a mass layoff or downsizing, you may request a “right of first rehire” when circumstances improve.
Being terminated is one of the most stressful events in an adult’s life. But if you get your head in the game and learn to negotiate your best deal, you will be able to move on with confidence.
Excerpt from “Employee Rights and Employer Wrongs” by Suzanne Kleinberg. For more information, visit http://www.potentialtosoar.com/products-page/product-category/u-s-employee-rights-employer-wrongs-2. “Employee Rights and Employer Wrongs” is available in paperback via the author’s website.
Suzanne Kleinberg is a career coach and author. With a B.A. in Economics, Master’s in Project Management, and PMP certification, Kleinberg is an avid “career changer,” having worked in a variety of fields that include stock brokerage, advertising, television production, financial, and IT. In 2010, Kleinberg founded Potential to Soar, a career and talent coaching service wherein she guides new graduates, seasoned professionals, and corporations through private coaching, customized workshops, and psychometric assessment tools. Kleinberg’s books include “Employee Rights and Employer Wrongs,” an everyman’s guide to navigating the complex world of labor and employment law; “It’s All About the Elizabeths,” which introduces financial management to teens; and “From Playstation to Workstation,” aimed at youth starting their careers. For more information, visit http://www.potentialtosoar.com