Schall and Barasch LLC

Severance Package Negotiation

Severance Package Negotiation: Is There a Formula for What is “Fair”?

Over the years, we have represented hundreds of New Jersey employees in severance package negotiations. One of the questions that frequently comes up is whether there is some formula out there, or some set of rules that apply, for figuring out the amount of severance pay that is “fair.”

The short answer to that question is, “No.” There is no formula, no book, and no set of rules that one can consult to determine what is a reasonable or fair amount of severance pay. Moreover, there is no law in New Jersey (or any state in the United States, for that matter) that requires that employers pay any severance pay whatsoever.

Some employers do choose to adopt “severance pay plans” that may provide for a week or two’s pay for each year of service, but we have found that those plans frequently contain loopholes (for example, severance pay not available if you are terminated for performance reasons) that employers will invoke in order to deny even that small amount of severance pay. Thus, we have recently found a number of large employers doing exactly that – terminating long-term employees for trumped up “performance reasons” in order to deny them severance pay.

Moreover, if you have a viable legal claim under New Jersey or federal employment law based on the circumstances surrounding the termination of your employment, it is frequently possible to negotiate a amount of severance pay well beyond the limits set out in any severance pay plan.

While severance pay will never fully make up for the damage caused by a termination, a good severance package will certainly ease the transition into your next job. Although there are some situations where you can, on your own, negotiate a favorable severance package, we’ve found that to be the rare exception. To the contrary, whether using our law firm or some other, we believe you are much better served being represented by a lawyer in negotiations. A lawyer can either guide you in negotiations while staying behind the scene or, as is more common, negotiate directly for you.

Aside from having a good lawyer representing you, there are many factors that can influence the outcome of the negotiation of a severance package on your behalf. They include the strength of any potential legal claim that you may have; the amount of severance that has already been offered; the length of your employment; your work performance; and a host of other factors. No two cases are alike, and each case needs individualized attention. Very often, if there is a non-compete agreement in effect, that too becomes a subject for negotiation.

Attorneys Richard Schall and Patricia Barasch, between them, have negotiated hundreds of severance packages for their clients over the years. In many of these cases, we negotiated substantial severance packages where none had been offered; in other cases we were able to greatly enhance the amount of severance pay that the employer had already presented. We are dogged and aggressive in negotiations on behalf our clients, but at the same time well-respected by the management-side attorneys we go up against.

If you are interested in discussing with us whether we can assist you in negotiating a severance package, or improving the one that has been offered, please contact our firm by completing the on-line Questionnaire.


Schall and Barasch LLC* Schall and Barasch LLC** Schall and Barasch LLC*** Schall and Barasch LLC Schall and Barasch LLC****

* In every year since 2014, the law firm of Schall & Barasch has been included in the Tier 1 list of best law firms in New Jersey practicing in the field of employment law on behalf of individuals. This list is compiled by U.S. News & World Report. A description of the selection methodology can be found at www.bestlawfirms.usnews.com/methodology.aspx.

** The methodology for the Avvo ratings of Richard Schall and Patricia Barasch can be found at www.avvo.com/support/avvo_rating.

*** In every year since 2009, Richard Schall has been chosen to be included on the list of Best Lawyers in New Jersey practicing in the field of labor and employment law. The Best Lawyers list is issued by Best Lawyers International. A description of the selection methodology can be found at www.bestlawyers.com/about/MethodologyBasic.aspx.

**** In every year since 2005, both Patricia Barasch and Richard Schall have been chosen to be included on the list of Super Lawyers in New Jersey practicing in the field of employment law on behalf of plaintiffs. The Super Lawyers list is issued by Thomson Reuters. A description of the selection methodology can be found at www.superlawyers.com/about/selection_process.html.

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