Taking the Edge Off Getting the Ax

When layoffs strike, stay calm--then negotiate

Even before September 11, more than 1.5 million American workers had been hit by mass layoffs this year. Economists say things are likely to get worse. But if the employer's scythe finds you, don't feel you are powerless. There are strategies you can use to walk away with the best possible financial deal, and with your professional reputation intact.

Just understanding that a firing is a negotiable transaction helps you avoid the biggest mistake workers make, says Steven Sack, a New York employment lawyer and author of Getting Fired (Warner Books, $7.99). "They bow their head and shuffle their feet out the door," he says. Yet even in a weak economy, you have leverage. Companies don't want to be sued by irate ex-employees. They don't want the kind of mean-spirited image that makes it harder to recruit in good times. And they don't want morale to plummet among remaining employees who see their colleagues hustled out the door.

True, severance packages will likely become less generous as corporate profits plunge. And in mass layoffs, it will be tougher to convince the boss to single you out for better treatment. But exceptions are made. Richard Bayer, chief operating officer of the Five O'Clock Club, a career-counseling and outplacement firm, points to a client laid off three months after moving across the country to take a new job. Reminding supervisors that his wife had just quit her job to follow him, he appealed to the company's sense of fairness and won more cash and additional career counseling. Your mantra should be, "I just want to be treated fairly," says Bayer.

First, remember that the ego-bruising firing session is a time to keep quiet. Don't become hostile or threaten to sue. Don't insist you're resigning instead. Don't try to bargain. Unless you knew the firing was on the way, you will be emotionally off-balance and in a poor position to negotiate. Listen, perhaps even take notes. "The trick is not to act pissed off and angry," says Sack. "You want to appeal to corporate decency and fair play."

Avoid signing anything that day. Instead, ask for everything in writing and schedule a follow-up meeting. Say something like: "You know, this is a shock. I need some time to think about it, and I'll get back to you." Most companies will agree to that, says Sack. In fact, if you're aged 40 and over, federal law requires an employer to give you 21 days (or 45 days in the case of a mass layoff) to consider the package before signing a waiver or release.

MOVING OUT. One thing to ask during the firing session is how and what other employees will be told. If you're a manager, perhaps you'll want to break the news to your staff yourself. Whatever you say should not conflict with the story you will use as you look for work. If you plan to tell prospective employers you lost your job as the company cut middle managers to save money, don't tell others you got canned because you didn't get along with your boss.

Also, ask when you can remove your belongings. Civility will often buy you the benefit of waiting until others have left, or of returning later. "There's nothing more humiliating than getting laid off and having to go into your office and pack up with everyone watching," says Damian Birkel, who founded the Professionals in Transition Support Group after going through two job losses. Also ask if you'll be able to check voicemail and have e-mail forwarded.

After you leave the initial meeting, seek advice from books and articles--or from an employment lawyer. Your local bar association can help you find one. Review the company handbook for benefits promised. If other employees were laid off, ask those you know what kind of deal they got. By the time of your return meeting, you should understand the company's offer and know what is important to you.

For many, the most valuable items will be the cash severance and outplacement services. Even in good times, it can take one month for every $10,000 a year a worker earns to find a comparable job, says Sack. Try asking for a month's salary for each year you've been with the company--keeping in mind that two or three weeks per year is more typical. If you're let go near the end of the year, see if the company will pay part of the money the following year to avoid a big tax bill while you're out of work. As for outplacement, decide if having use of an office is as important to you as coaching from a career counselor. You might want to ask for additional counseling in return for a shorter stay at the outplacement center, or for cash to buy the services you need.

VACATION TIME. Since keeping you on the company health plan costs little compared with severance payments, you may find flexibility here. Three months, six months--even a year--might not be out of the question. Ask if the company will continue covering you on its group plan rather than simply making the payments for you under COBRA, the federal law giving workers the right to continue health coverage at their own expense. That way, you'll still be eligible for 18 months of coverage under COBRA after the company insurance ends.

Make sure you'll be paid for unused vacation and comp time and get an accounting in writing. If your company pays a yearend bonus, ask for a prorated amount. If you're close to vesting in a pension or stock options, see if the company will keep you on the payroll until that happens. If Securities & Exchange Commission or pension rules stand in the way, try to negotiate a cash settlement for the options instead. For this, you might need an economist or pension actuary to calculate a fair value, says Hempstead (N.Y.) employment lawyer Robert Rosen.

Through all this, remember: The most valuable thing you'll take with you is your professional reputation. Negotiate the kind of reference you'll receive, and get it in writing. If your former boss loved you but the new taskmaster thought you were incompetent, list the earlier guy on applications. Call or send thank-you notes to those who have agreed to give references, outlining the job strengths you plan to cite in interviews. If all else fails, ask your boss and company personnel manager to just confirm your dates of employment and job title to prospective employers.

Don't resign. Getting downsized is easier to explain than quitting without a new job, says Sack. Plus, unless you get a side agreement from the company promising not to contest your unemployment benefits or deny severance, that bit of pridefulness can be costly. Only if the alternative is having your boss tell callers you were fired for cause or poor performance should you consider resigning instead of letting the company fire you, advises Sack. Even then, try to get an agreement allowing benefits.

Employees don't have to be caught as off-guard this time as they were in the early '90s recession, when white-collar layoffs were a newer phenomenon. In 1993, when R.J. Reynolds Tobacco axed 1,200 workers, it never occurred to John Colthar, a North Carolina computer programmer, that he could ask for a better deal. Today, as he watches his new employer go through a merger in an economic slowdown, he says he won't be so naive if there's a next time.

By Carol Marie Cropper

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE