Can severance pay be negotiated?

Losing your job can bring a lot of uncertainty, especially when it comes to your finances. If you've been offered a severance package, you may be wondering whether you have to accept the terms as presented or whether there's room to negotiate.

The answer is often yes. According to LHH's 2027 U.S. Severance and Separation Benefits Report, 61% of organizations have a process for employees to appeal or negotiate their severance packages.

But severance is changing. While most organizations still provide it, many have become less generous with their packages. Understanding how employers approach severance and which benefits may be open for discussion can help you make informed decisions about your next steps.

Is severance negotiable?

 

Severance remains a common practice among US employers. LHH's latest research found that 92% of organizations pay severance, whether or not they have a formal policy.

However, the amount employees receive is changing. Over the past two years, 38% of organizations made their severance packages less generous, compared with just 9% in the 2024 study.

At the same time, employers are taking a more individualized approach to calculating severance. Today, 40% base severance on a combination of age, length of service, position level and ability to find new work, up from 22% in 2024.

These findings make it especially important to understand how your employer calculates severance and whether your circumstances might warrant a different arrangement.

Key elements open for discussion

A severance package can include much more than a financial payment. Depending on your employer's policies, you may be able to negotiate several elements of your agreement.

Bonus

If you're leaving before your annual bonus is paid, ask whether you're eligible for a prorated payment. This may be particularly relevant if you've already completed much of the performance period or contributed significantly to the goals tied to your bonus.

You can also ask about any outstanding commissions, incentive payments or other compensation you've earned.

Timing of severance payments

Severance may be paid as a lump sum, through continued payroll payments or through another arrangement.

If you have flexibility, consider how the payment schedule could affect your financial planning, taxes and eligibility for other benefits.

Before agreeing to a payment structure, it may be helpful to consult a financial or tax professional.

Medical benefits

Healthcare coverage can be one of the biggest concerns when leaving a job, particularly if you have dependents or ongoing medical expenses.

LHH's 2027 study found that 85% of organizations continue medical benefits for employees who were enrolled before termination. However, the length of that coverage varies considerably.

Only 12% of organizations continue medical coverage for the full severance period, down from 52% in 2024.

If your employer offers continued coverage, ask how long it will last and whether an extension is possible. You may also want to discuss assistance with COBRA premiums or other healthcare costs.

Technology and equipment

If you've been working remotely, you may be able to negotiate keeping your company-issued laptop, phone or other equipment.

Some organizations may be willing to make these arrangements once company data has been securely removed. It's worth asking, particularly if the equipment would help you during your job search.

Professional references and referrals

A positive reference or introduction can be valuable when you're looking for your next opportunity.

Consider asking your employer to provide a written reference, make professional introductions or clarify how your departure will be communicated to prospective employers.

Non-compete agreements

Some severance agreements include restrictions on working for competitors or contacting former clients.

LHH's 2027 study found that 30% of organizations include non-compete provisions in separation agreements where legally permissible.

If your agreement contains restrictive covenants, consider asking whether they can be narrowed or removed. Because the enforceability of these agreements varies by state, consulting an employment attorney can help you understand your options.

Career transition support

Severance can also include services designed to help you find your next job.

LHH's 2027 research found that outplacement support has expanded across the workforce. Today, 85% of organizations offer outplacement to exempt employees, up from 61% in 2024, while 79% offer it to non-exempt employees, up from 58%.

Outplacement services may include career coaching, résumé development, interview preparation, networking support and access to job search tools.

If your severance package includes outplacement, ask what services are available, how long the program lasts and when you need to begin using it. If it isn't included, consider requesting it as part of your negotiations.

Why companies may be flexible with severance packages

Organizations have different reasons for offering severance, from supporting employees through a difficult transition to reducing legal risk and protecting their employer brand.

A standard severance policy can help ensure employees are treated consistently, but individual circumstances sometimes call for additional consideration.

For example, an employee with many years of service may have different financial needs than someone who has only recently joined the organization. Similarly, someone facing a particularly difficult job market may need more time or support to secure their next role.

Severance agreements can also involve legal considerations. LHH's 2027 study found that 64% of organizations require employees to sign a release of claims in exchange for severance. Another 60% enhance severance benefits for employees who sign a release.

These findings underscore the importance of reviewing the full agreement, including any rights you may be asked to waive, before accepting an offer.

How to negotiate your severance package

If you've received a severance offer, it's worth taking time to review the details before responding.

Start by understanding what's included and identifying which elements matter most to you. Additional severance pay may be your top priority, but extended healthcare coverage, career transition support or changes to restrictive covenants could also make a meaningful difference.

A few steps can help you prepare for the conversation:

1. Review the entire agreement. Look beyond the payment amount to understand the benefits, conditions and deadlines.
2. Understand your employer's policy. Ask how severance is calculated and whether there's a formal process for requesting changes.
3. Prioritize your requests. Focus on the elements that would provide the greatest financial or professional benefit.
4. Make a clear, reasonable case. Explain your request based on your circumstances, years of service or other relevant considerations.
5. Seek professional advice. An employment attorney or financial advisor can help you evaluate the offer and understand its implications.
6. Get any changes in writing. Make sure the final agreement reflects the terms you've discussed.

Remember that employers aren't required to negotiate every severance offer, and some policies may leave little room for changes. Still, asking questions and understanding your options can help you make a more informed decision.

Summary

Severance pay can be negotiated, but the amount of flexibility varies by employer and individual circumstances.

LHH's 2027 U.S. Severance and Separation Benefits Report found that 61% of organizations have a process for employees to appeal or negotiate their packages. At the same time, employers are making severance less generous and taking a more individualized approach to determining benefits.

If you're facing a job transition, reviewing your full package and understanding what may be open for discussion can help you secure the support you need to move forward.

For employers, clear severance policies and thoughtful career transition support can help employees navigate change while protecting trust and the organization's reputation.

How does your organization's severance policy compare?

Explore LHH's 2027 U.S. Severance and Separation Benefits Report to see how employers are approaching severance, benefits and career transition support.