Your business is well-known for being fair to its employees. Now that one of your executives is going to have to be laid off, you’re focused on how you can negotiate a fair severance package with them. It’s your priority to be as fair as possible, but your executive may not agree with what you offer.
To negotiate a good severance package, it’s important to start out knowing what both sides want. For example, you may be willing to give the employee 10% of their annual income as a severance, but they may ask for 25%. You may offer a compromise at 15%, but if the employee doesn’t want to take it, which can leave loose ends that you don’t want.
As a way to sweeten the severance, it may be a good idea to offer benefits as well as money. For instance, you could say that you’ll continue providing insurance to the employee for the remainder of the year and provide compensation amounting to 15% of their total earnings. That could help your employee save thousands in health insurance costs, which is something many people would be happy to see in a severance.
In your severance package, you may want to include a non-compete clause. That helps minimize the risk of your employee moving on to a competitor. If they won’t take the severance because of that clause, though, you may need to consider other ways to negotiate and make the severance better. Otherwise, the employee could just walk away without a severance and immediately seek work with your competitor.
As a company, you want the severance to be appealing and to protect your interests. It’s worth discussing possible severance options with your attorneys and the employee.