You're fired! Cash in on your way out, Part 1
Sure, it hurts to be shown the door at a Goldman or Merrill, but this is no time to get emotional. Keep your wits about you to cut a lucrative deal. Step one of how to do just that starts now.
In the U.S., companies aren't legally required to cushion your exit. You'll probably be offered a cookie-cutter package if you don't have a contract spelling out your severance. On Wall Street, this means anywhere from one week to two months' salary (on the very high end) per year of service. Senior execs may have contracts awarding several years of severance. Many plans terminate when you land another job; almost all require you to keep things confidential and surrender your right to sue.
Not the finish but the starting line
Any offer of severance should be considered exactly that: a starting point for negotiations. Ken Taber, an employment law partner at New York's Pillsbury Winthrop LLP, says the senior executives he represents often recover hundreds of thousands of dollars above their contracts, and, not uncommonly, an employee working without a contract and earning around $250,000 (€203,000) can secure a high five-figure package.
You're not as powerless as you think. Lee E. Miller, a former employment lawyer whose New York-based company, NegotiationPlus.com, conducts negotiating workshops at financial services firms such as Bear Stearns, Citigroup, and HSBC, says, 'Ask yourself, 'What do I have, even though I'm leaving, that they need?' The gist of what you say is, 'Things obviously haven't worked out, but I'd like to part friends and here are some things you may need from me. I'm happy to help. All I want is a fair severance.'
Your hidden leverage includes:
- Client relationships & deal knowledge are your most valuable assets. Guarantee a smooth transition. Assurances about client relationships alone can be worth up to several hundred thousand dollars depending on the client's importance.
- A smooth exit: Taber says, 'Employers are usually prepared to pay some kind of premium for a peaceful transition....' Vow not to badmouth or share valuable information-but don't sound as if you're threatening to lie or blackmail.
- Guilt (theirs): Use it. Miller says, 'No one likes to fire anybody. Everybody feels guilty about it until you act like a jerk.'
- Extenuating circumstances: Point to your giant mortgage and double set of college tuition bills-and your recruiter's prediction that it will take you twice as long as your severance period to land a comparable job.
If you're still not getting a fair shake, a lawyer can tell you whether you have grounds for a lawsuit, such as in the following cases:
- Breach of contract, if you have one.
- Employment discrimination: If you were discriminated against on the basis of your age (over 40), race, sex, national origin, sexual orientation, or pregnancy, you may be able to file a lawsuit under New York state and U.S. federal laws. But if you lost your job in a widespread layoff, your employer may be disinclined to up the ante when you yell discrimination. Says Judith A. Lockhart, an employment law partner at Carter Ledyard & Millburn LLP, a Wall Street firm which has handled employment contract disputes for Goldman Sachs and for many ex-Merrill Lynch executives, 'In a larger layoff, generally companies today have gotten good advice. They look long and hard at who they're letting go.'
- Oral promises: In New York, a specific promise made to induce you to do (or not do) something- such as, 'We love you and you have a job here for the next two years, guaranteed,'-may be legally recognized. Says employment lawyer Taber, 'It's not easy to prove, but we're not talking about winning in court. We're talking about having leverage for a meaningful negotiation.'
Court of last resort?
It's unquestionably smart to get the advice of a lawyer, but think hard before announcing your intent to sue. Negotiation guru Miller says, 'People react badly to threats. You draw a line in the sand, and the first reaction is, I'm crossing the line.' He suggests saying something like, 'I want a good relationship with you. My lawyers tell me I have a great lawsuit, but the last thing in the world I want is to have this end up in court.'
Legal maneuverings can cast a shadow over your job hunt. Miller says, 'No one will say it, because it's illegal not to hire someone because they engaged in or threatened a lawsuit, but it's human nature... it's a small industry and people know each other.'
If you're determined to press ahead, don't do it too soon. Your business group-whose loyalties (guilt!) likely pull in your direction-will quickly hand you off to the company's lawyers, to whom you are just another adversary.
See Part 2 next week on what's negotiable and what's not
For more information, visit the following web sites:
Sample severance agreements: