Should You Take a Voluntary Severance Package?

Way too many of my friends and acquaintances have been faced with this dilemma recently:  my company has given me the option of leaving the company voluntarily with a severance package that sounds pretty good.  Do I take it and run, or stick around and risk getting laid off later?

If this applies to you, I can’t really tell you exactly what to do.  I don’t know what’s going on at your company, or what your personal financial outlook looks like.  But I did think about what I would do if placed in this situation, and here are a few thoughts:

If the company is offering employees voluntary severance packages, that must mean that things aren’t going particularly well.  After all, the decision to downsize is a risky and expensive one, and management wouldn’t be doing it if it didn’t foresee serious trouble ahead.  I’d also be willing to bet that if involuntary layoffs do eventually occur, the deals for those people won’t be as sweet.  Taking a voluntary package will likely give you more control over your career and next steps since you will know exactly what’s going to happen and when.  All this means that you may be better off getting out while the going is good. 

On the other hand, there are advantages to staying put.  Right now, a ton of companies have laid people off and the job market is flooded.  The economy is bound to improve at some point in the next year and you will likely have more options at that time.  Also, if your organization has been in business for a long time, is generally pretty stable, and is continuing to hire in certain areas, you may be able to make lemonade out of the lemons of a re-organization.  If your career has been in a rut, once the storm has cleared you may have the opportunity to re-invent yourself for the company good.  These factors too are worth considering in making the decision to stay or go. 

Comments

[Mark]

Good points for both sides of the argument. I tend to lean towards taking the package if they are offering it because you never know if cutbacks may hit you.

[Dan Erwin]

I'm in agreement with the previous comment. There is also some reputable research that suggests that the first offer is normally the best offer. That doesn't mean that you can't negotiate that offer, but that if you turn down the opportunity, the next time an offer comes up it won't be as lucrative. Obviously, this research is generally true--or far more often true, than not--and your opportunity may be different. But I think most employees need to be aware that in general this is the case.

Second, there are legal counselors who will help you negotiate better. They will coach you in their office, and will not come and represent you. As a rule, you will do better negotiating for yourself, not setting up an adversarial or legal situation. But I have a significant number of clients who have done exceptionally well for themselves by taking the coaching training. For those of you who have interest, contact me through my website and I'll give you one name of a lawyer involved in the business--(I'm not on his payroll.).

[Alexandra Levit]

@Mark, true. After all, if you're cut-able now, that situation might not change in a few months.

@Dan, thanks again for your great insights on the blog, and I appreciate you explaining the nuances of bringing in legal counsel.

[Dalia Pastor]

Ok, I have a question that seems to have many interpretations. 10 people were layed off at the company we worked. They are definitely going down sooner or later. They offered a 1 week pay for severence but sent a very legalize document which I interpreted to have a clause relieving them of their obligations for any health and welfare benefits. They do not indicate Cobra, but since I believe the company will fold and merge with another company, I worried that that clause would exclude me from continuing my Cobra benefits if they should merge. I sent it to an employee specialist lawyer and she seemed to interpret that clause as I did. My question is,..Is that legal? Can they have you waive rights under the Federal Cobra law? I know that if they should fold and offer no health plan, they there is no Cobra, but if they file chapter 11 the company taking over may have to include you in their plan. I just wanted to know if I am correct to reject the offer of one week's pay as the clause made me nervous as it did the attorney. Can a company do that is my question. Doesn't Federal statutes override that. They did not specifically say you waive your Cobra rights but it did say health and welfare benefits would be barred if you agree.

Any information would be very helpful.

thanks