Negotiating Severance Pay - How much is appropriate?

Giggles_Funsworth

I've never done this or been in a position to do it before. I'm hammering out the details for a contract tomorrow. The job is a consultant role with a small company in information security. After going through the interview I realized I lowballed my salary requirements in relation to my abilities that make me uniquely suited for the role and how common they are, but I'll still be making more than enough to cover my needs. Honestly my last couple positions have been remote which gave me a high degree of flexibility for travel and working wherever I felt like week to week, so I'd much rather ask for a large amount of vacation anyway. I'm planning on starting negotiation at 2 months a year.

Where I'm completely lost, is I intend to ask for some kind of severance pay. I've never been in a position to do this before, and I have no idea what is appropriate. Is there some percentage of gross pay or "Severance = X Months of Salary" that I should be aware of?

Blarghy

Generally, and I mean really generally cause this varies wildly by jurisdiction/industry/etc, severance pay is based on the length of time that the employee has served. The most quick and dirty calculation would be 2 weeks salary per year served (1-4 weeks is the general ballpark). Obviously though, it can be anything, but you might find a decent starting place from there.

Giggles_Funsworth

That's what I was thinking but I was also reading that it's relatively common to attach six months severance pay to positions that pay over six figures, and management roles, which they are grooming me for.

Maybe ask for 2 months/year/max 6 months and 2 months vacation. Gives me plenty of bargaining room.

Djeet

Is it normal during comp negotiations for contract work that salary is negotiated separately from other benefits like vacation and severance? I would've thought that would all have been in one negotiation. If salary is already fixed in an offer that would complicate the negotiation of other benefits.

Is this a contract-to-perm position? I ask because you say you're being groomed for a managerial role, and that seems odd unless you're there to cull.

Giggles_Funsworth

There's nothing on paper yet but I said what I wanted was significantly less that what I should have.

Should be full time, but I'll be operating in a region they don't have an assets in, and the idea is if our relationship is successful I start a local office and bring on additional consultants locally and manage them.

Feral

I will strongly urge you to have a lawyer review your contract if severance pay is important to you.

I have been screwed out of severance pay in the past. I can't really go over the details, but when I spoke with lawyers after the fact, I was politely informed that I should assume that I will never receive any promised severance pay unless my initial employment contract was airtight.

Giggles_Funsworth

Well, it's too late now. They weren't open to severance pay anyway, dodged the question with "well we've never had a situation where anybody's left and would have wanted it!" and managed to admit they have no-poaching agreements in place with other companies while doing it. >.<

The offer and the experience it will give me is good enough that it was worth the ignorance and/or lack of scruples of the company, I'm leaning toward ignorance for what it's worth, they're very small and the owner seems pretty stand-up. Definitely going to have to talk to him about the no-poaching if I stay there long enough to be influential enough to do so though, if only from a legal self preservation of the company standpoint.

Feral

Sarcastic awesome.

Giggles_Funsworth

Yeah, like I said in the edit, I think he actually meant it and he probably doesn't know the no-poaching is bad? Owner has a similar professional background to me before starting his own company and the no-poaching thing didn't strike me as bad when my last FTE manager mentioned it while in a final interview. I only realized the impact and that it was in fact illegal after the more recent news coverage of such agreements.

I should really start recording final offer interviews though. Management says the dumbest things.

LostNinja

Sorry for my ignorance, but what's the difference between a no-poaching agreement and a non compete?

Djeet

No-poaching has the burden on the employer. Non-compete has the burden on the employee.

Blarghy

LostNinja wrote: »

Sorry for my ignorance, but what's the difference between a no-poaching agreement and a non compete?

No poaching is a group of employers getting together and making an agreement not to hire away each other's staff (i.e. to conspire to keep wages down, and why it is illegal). Non-compete is an employee agreeing not to take skills/contacts/etc that they developed while working at their current job and then using it against their current employer (i.e. the employer covering their ass).

bowen

Also non-competes are mostly unenforceable. Generally they're only enforceable if you have a trade secret whilst being handsomely compensated with an equivalent severance. IE, if you have a non-compete for 2 years, you'd get severance for 2 years (or get paid an extremely above average wage).

CEOs and Doctors typically see this kind of thing.

No-poaching is illegal because as @blarghy said, it's a way to force wages down.

On the down low you may want to inform the DoL or some such.

Giggles_Funsworth

bowen wrote: »

Also non-competes are mostly unenforceable. Generally they're only enforceable if you have a trade secret whilst being handsomely compensated with an equivalent severance. IE, if you have a non-compete for 2 years, you'd get severance for 2 years (or get paid an extremely above average wage).

CEOs and Doctors typically see this kind of thing.

No-poaching is illegal because as @blarghy said, it's a way to force wages down.

On the down low you may want to inform the DoL or some such.

I will see what happens. It's a very small company and if I end up in charge of the Western United States and then Europe I could get enough leverage to change it on my own. Honestly think it's the kind of thing he might just be ignorant about but need to further assess the situation.

Dr. Frenchenstein

2 months vacation? did they go for that? that is a buttload of vacation.

Typically "no-poaching" agreements are between companies that have a relationship. like if my company hired PWC to do some consulting, i wouldn't try to hire any of their people on the engagement, and vice versa.

Giggles_Funsworth

Nah, I hit somewhere in between what they were offering and what I asked for as intended.

Also what you are describing is illegal and what Google, Apple, etc. are getting sued for (I think, IANAL).

Djeet

The no poaching thing is going to work its way through courts given the apple/Google suit. It is collusion and trust behavior so we will see what happens.

Non competes are essentially unenforceable. If you have to sign one go ahead. They can't do shit.

If you are passing trade secrets then they will nail you for theft or something.

Giggles_Funsworth

Djeet wrote: »

The no poaching thing is going to work its way through courts given the apple/Google suit. It is collusion and trust behavior so we will see what happens.

Non competes are essentially unenforceable. If you have to sign one go ahead. They can't do shit.

If you are passing trade secrets then they will nail you for theft or something.

I live in California so they're actually unenforceable anyway. You can sign them here but they aren't worth the paper they're written on.

zepherin

For the purposes of prosperity. If a company is asking you to sign a no-compete agreement, it is important to understand your states covenant not to compete laws. If you have accepted an employment agreement, and you are not desperate for work. IE No compete agreements being a lesser evil to starvation. Make sure you get something for it. Additional vacation, a signing bonus, a completion bonus. If it is routine for all employees to sign one, then it is likely unenforceable. Where I live it is not common for those agreements, because employees can just do 2 years in federal service, and the federal government won't recognize it, and companies are not competing with the government. With federal contractors you don't see them under the VP range. However Delaware will pretty much enforce any no compete agreement around, so as always be careful.

Djeet

Yeah. Delaware is fucked (edit: like it should give you pause that most if not all of the companies that you have entered into relations with have incorporated in Delaware, with ops incorporated elsewhere ). No disrespect to Delawareans.

If they make a deal of it then you should definitely use it as a lever to get extra PTO or something ... given that it doesn't make you beholden to them anyways.

Giggles_Funsworth

Non-competes are pretty standard in my industry and I can't say I've ever gotten anything for one. Usually I just sign them for the lulz, have heard of all of two companies causing a ruckus over them, one which does not exist anymore, one which is rapidly losing respect in the industry.

This one I actually did go back and forth with them on, had them pare it down until it only applied to one big partner and clients, reasonable. Normally I wouldn't have gone to the effort but there was a clause in it that it was to be enforced in Texas. Looking it up Texas law seemed to be less employee friendly than California so it was a point of contention for me.