Should I Attempt to Negotiate My Severance Offer?

If you’ve recently been terminated, you may be wondering whether negotiating your severance offer is worthwhile. While it’s always possible to attempt negotiation, the real question is whether you have a realistic chance of improving your offer by yourself.

The likelihood of success often depends on how your employer handled your termination. Generally, terminations fall into one of two categories:

1. Group Terminations (RIFs – Reduction in Force or Layoff)
2. Individual Termination

These two types reflect how your termination was conducted — either as part of a larger group layoff, or as an individual decision about your employment. Understanding which type of severance offer you received is crucial because it directly impacts your ability to negotiate for improved pay or benefits.

• Group Termination (RIF): A Group Termination, also known as a Reduction in Force (RIF), and commonly called a “layoff,” occurs when a company terminates multiple employees at once, often due to downsizing, restructuring, or other cost-cutting measures. This can also include performance-based group layoffs, where employees are let go based on comparative performance evaluations rather than individual misconduct or job elimination.  Negotiating an increased severance offer arising from a RIP involving multiple employees ordinarily is very difficult because the terms of the severance offer are not flexible because many different people are involved.
• Individual Termination: This occurs when an employer terminates a single employee, often for reasons such as performance problems, company restructuring, or other individual circumstances. Unlike RIFs, severance offers in individual terminations are more flexible because only one person is involved. Because these offers are discretionary and aimed at “buying peace,” there’s often greater potential for negotiation — especially if you or your attorney can highlight valid concerns or legal risks for the employer.

In the sections below, Matt Ruggles breaks down the key differences between these two types of severance offers, what factors make negotiation more or less likely, and how to proceed if you believe you deserve more.

Type 1: Group Layoffs (RIFs) and Severance Formulas

When a company conducts a Reduction in Force (RIF) — a type of group termination/layoff — the company typically follows a structured severance formula that applies to all affected employees (i.e. all employees being terminated in the RIF). This approach is designed to ensure consistency and minimize the risk of legal claims related to discrimination or favoritism. Because RIFs involve multiple employees being terminated at the same time, employers must carefully plan the process to reduce their legal exposure.

How Employers Use Demographic Analysis in RIFs

To protect themselves from potential discrimination claims, employers conducting a RIF often perform a demographic analysis before finalizing the list of affected employees. This analysis helps the company identify whether the terminations disproportionately impact certain protected groups, such as employees over 40, women, racial minorities, or individuals with disabilities.

Here’s how the process typically works:

1. Selection Process: Employers identify the criteria they will use to decide who will be included in the layoff. Common criteria include job performance, seniority, or the elimination of entire departments or roles.
2. Demographic Analysis: Once the preliminary list of employees selected for termination is created, the employer conducts a statistical review to compare the demographics of the affected employees with those of the broader workforce. This analysis helps identify any patterns that could suggest discrimination — even if unintentional.
3. Adjustment Period: If the analysis reveals that certain protected groups are disproportionately affected, the employer may revisit the criteria or modify the list to reduce the appearance of bias. This process helps minimize the risk of discrimination claims under laws like the Age Discrimination in Employment Act (ADEA) or Title VII of the Civil Rights Act, or similar state laws.

By performing this analysis, companies attempt to demonstrate that the RIF was conducted fairly and in compliance with anti-discrimination laws.  Consequently, an individual employee’s observation that “many people of over 40” (or members of any other protected characteristic) were fired rarely results in a valid claim for age discrimination or any other form of prohibited discrimination.

How RIF Severance Formulas Are Structured

To further reduce legal risks, employers often establish a fixed severance formula for RIFs. This formula is intended to apply severance terms uniformly across all affected employees. Common factors in a RIF severance formula include:

• Length of Service: Employees may receive a set number of weeks’ pay for each year of service.
• Position or Job Level: Some formulas provide additional severance for management or senior-level employees.
• Cap on Severance Pay: Employers may place a maximum limit on severance to control costs.

The key purpose of this structured approach is to prevent accusations of favoritism — whether positive or negative. By applying the same formula consistently, employers reduce the risk of one employee claiming they were treated unfairly compared to others in the layoff.

Why RIF Severance Offers Are Difficult to Negotiate

Because RIF severance formulas are designed to be objective and consistent, employers are generally reluctant to deviate from them. Doing so could undermine the uniformity that protects the company from legal challenges.

However, there are exceptions where negotiation may be possible:

The Exception: When a RIF Severance Package May Be Negotiated

Although RIF severance offers are often inflexible, you may be able to negotiate under specific circumstances:

• Valid Legal Claims: If you have strong evidence of discrimination, retaliation, or wrongful termination, your employer may be willing to increase your severance to avoid the risk of a lawsuit.  To support a strong claim, an employee needs direct evidence of illegal conduct by the employer, not just supposition, guesswork or “gut feelings” that the RIF was done incorrectly, unfairly or illegally.  Ideally, the direct evidence will include evidence that the employee was included in the RIF as a form of discrimination or retaliation.
• Pending Legal Action: If you’ve already filed a claim — or if your employer believes you have a valid basis for one — they may be more inclined to improve your severance offer to resolve the matter quickly.  This is uncommon for most employees and would always involve a pending claim in court or before an administrative agency, normally with the assistance of an attorney.

What Doesn’t Work in RIF Severance Negotiations

Simply arguing that your termination was “unfair” is unlikely to result in an improved severance package. Because RIFs are carefully structured to avoid favoritism and bias, emotional appeals or claims that the layoff process was “unjust” rarely convince employers to increase severance unless there’s a clear legal basis for doing so.

Type #2: Individual Terminations and Severance Negotiation

When an employer decides to terminate an individual employee — as opposed to conducting a group layoff — severance offers are typically more flexible and discretionary. Unlike in group terminations, there’s normally no set formula that dictates how much severance an employer should provide. Instead, severance in individual terminations is often a strategic decision driven by the employer’s desire to avoid a future dispute with the terminated employee.

The fact that your employer has offered you a severance package is a strong indication that they see some value in “buying peace” — meaning the company is willing to pay you money (a severance payment) in exchange for your signature on a waiver of all known and unknown claims arising from your former employment or the termination of your employment (the severance agreement).  Simply put, the company’s willingness to pay for closure creates an opportunity for negotiation.

Key Features of Individual Severance Offers

Unlike severance formulas in group terminations, individual severance offers can vary significantly based on the employer’s assessment of risk and other factors. Here’s what you need to know:

• Discretionary Severance Amounts: Since no fixed formula applies, severance amounts can vary widely. Employers may consider factors such as your length of service, position, and perceived risk of legal exposure when determining their offer. Some employers may offer only a modest amount, while others may provide substantial severance if they fear potential legal claims.  In most cases, the company’s initial offer is not the company “best, last and final” offer.
• Risk-Based Decision Making: Employers typically assess the likelihood that you might pursue legal action before determining what they’re willing to offer. The greater the perceived legal risk, the more they may be willing to pay.
• Room for Negotiation: Because employers in individual terminations are already signaling that they see value in “buying peace,” they are often more open to negotiation — particularly if you or your attorney can raise legitimate concerns that increase the employer’s perception of risk.

Why Employers Offer Severance in Individual Terminations

Employers rarely provide severance in individual terminations purely out of goodwill. Instead, they are usually motivated by one or more of the following:

• Perceived Legal Risk: If the employer suspects you may have grounds to pursue a claim — such as discrimination, retaliation, or wrongful termination — they may proactively offer severance to prevent a lawsuit.
• Desire to Secure a Waiver of Claims: Most severance agreements require the employee to waive their right to file certain types of legal claims against the company. Offering severance is often a calculated move to secure this protection.
• Avoiding Negative Publicity: Employers may offer severance to resolve disputes quietly, especially if they’re concerned about reputational damage.
• Maintaining Employee Morale: Employers sometimes offer severance to ensure that remaining employees see the termination as fair or to deter workplace tension.

Can an Individual Severance Offer Be Negotiated?

Yes — and often successfully. Since individual severance offers are discretionary and rarely bound by a rigid formula, there is often more room to improve the terms of your severance package.

Negotiation is most effective when you or your attorney can raise legitimate concerns that create additional risk for the employer. Common factors that may strengthen your negotiation position include:

• Potential Discrimination or Retaliation Claims: If you believe your termination was motivated by discrimination, harassment, or retaliation, this can give you leverage in negotiations. Even if you haven’t filed a formal complaint, raising credible concerns may prompt your employer to offer more severance to avoid potential legal action.
• Violations of Company Policy or Employment Law: If your termination appears to have violated internal policies, employment laws, or procedural rules, this can increase your negotiating power.
• Evidence of Inconsistent Treatment: Showing that employees in similar situations were treated differently can raise concerns about fairness or favoritism, which may increase your employer’s willingness to offer more severance.
• The Employer’s Desire to Avoid Prolonged Disputes: Some employers may offer a better severance package simply to avoid the time, expense, and uncertainty of drawn-out legal proceedings — particularly if they fear the issue could escalate.

Strategies for Negotiating an Individual Severance Package

To improve your chances of a successful negotiation:

• Engage an Employment Attorney: Experienced employment lawyers understand what employers fear most in these situations. By crafting a demand letter or presenting a credible legal argument, they can apply pressure that encourages the employer to increase your severance.
• Highlight Key Risks for the Employer: An effective negotiation strategy may involve emphasizing potential legal claims, reputational concerns, or procedural errors that expose the employer to risk.
• Stay Focused on Key Issues: Avoid emotional arguments or lengthy letters describing every detail of your experience. Instead, focus on facts that increase the employer’s perception of risk.

Why Engaging an Employment Lawyer Makes Sense in Severance Negotiations

Negotiating a severance package can be complicated and daunting. Partnering with an experienced employment lawyer can significantly improve your chances of achieving a favorable outcome. Here’s why:

How an Employment Lawyer Strengthens Your Negotiation:

• Strategic Approach: Employment lawyers excel at applying the right kind of pressure to secure the best possible deal. They know how to draft a precise demand letter, use litigation threats effectively, and even file a lawsuit to underscore the risks the employer faces.
• Expert Legal Insight: With their deep understanding of employment law, an attorney can accurately assess the value of your claim and ensure you don’t miss out on any compensation or benefits you’re entitled to.
• Credibility with Employers: Employers are far more likely to take an experienced employment lawyer seriously. When an attorney who specializes in employment law represents you, it signals to the employer that you’re serious and well-informed, making them more inclined to engage in productive negotiations.

Why Cutting Corners in Severance Negotiations Can Cost You

If you’re hesitant to hire an experienced employment lawyer, you may be tempted to either negotiate alone or rely on a lawyer who doesn’t specialize in employment law. Unfortunately, both approaches can backfire and leave you with a weaker severance package than you deserve. Here’s why:

Negotiating Alone is Risky

While it may seem straightforward to ask for better severance terms, negotiating on your own is rarely effective — and can even weaken your position. Without understanding what drives employers to improve severance offers, employees often:

• Focus on emotional arguments rather than strategic legal points.
• Overlook potential legal claims that could give them real leverage.
• Undermine their own case by making poorly worded or disorganized demands.

Employers are unlikely to improve a severance offer unless they perceive a credible legal risk — something self-represented employees often fail to establish.

Choosing the Wrong Lawyer Can Be Just as Bad

Many employees assume that involving any lawyer will improve their chances. However, hiring an attorney who doesn’t specialize in employment law can be just as ineffective as going it alone.

Non-employment lawyers — no matter how skilled in their own field — often:

• Fail to recognize the strongest legal claims that create meaningful leverage.
• Overlook key legal protections specific to California employees.
• Miss opportunities to apply pressure in ways that employer-side attorneys take seriously.

Employment lawyers who regularly negotiate severance agreements understand how to frame your situation in terms that create risk for your employer — the key to unlocking a better offer.

FREQUENTLY ASKED QUESTIONS ABOUT SEVERANCE NEGOTIATIONS

Can I negotiate my severance if I was part of a group termination (RIF)?

Severance offers in group terminations are typically based on a set formula designed to ensure fairness and reduce legal risk. Because these formulas are intended to be consistent, employers are often reluctant to deviate from them. However, you may have a better chance of negotiating if:

• You have a valid legal claim, such as evidence of discrimination, retaliation, or wrongful termination.
• There’s pending legal action or a credible threat of a lawsuit that creates risk for the employer.

In these cases, employers may be willing to improve severance terms to avoid costly disputes.

Are severance offers in individual terminations easier to negotiate?

Yes. Severance offers in individual terminations are far more flexible since there’s no set formula. Employers provide severance in these cases to reduce the risk of legal claims or reputational harm. Because the employer has already determined that paying severance is worthwhile, there’s often more room to negotiate — especially if you can highlight risks that may concern the employer.

What factors improve my chances of negotiating a better severance package?

Your ability to negotiate successfully often depends on whether you can raise concerns that increase the employer’s perception of risk. Strong leverage points include:

• Evidence of discrimination, retaliation, or wrongful termination.
• Violations of company policy or employment law.
• Proof that you were treated inconsistently compared to other employees.
• The employer’s desire to avoid negative publicity or a prolonged dispute.

Even if you don’t have a formal legal claim, credible concerns that suggest potential liability may prompt the employer to improve your severance offer.

Should I hire an employment attorney to negotiate my severance?

Yes — particularly if your severance offer appears low or you believe your termination may have been unlawful. Experienced employment attorneys understand:

• How to identify and present valid legal claims to create leverage.
• The strategic use of demand letters, litigation threats, and prepared lawsuits to motivate employers to improve their offers.
• How to avoid common mistakes that weaken your negotiating position.

While some employees attempt to negotiate on their own, this often results in leaving money on the table or inadvertently weakening potential claims.

What mistakes should I avoid when negotiating my own severance?

The most common mistakes employees make when attempting to negotiate severance include:

• Writing long, emotional statements that fail to apply legal pressure.
• Focusing on perceived unfairness rather than potential legal violations.
• Making weak demands without a credible threat of legal action.

Employers are less likely to take your concerns seriously unless they believe you have the leverage to escalate the situation — something an experienced employment attorney can effectively convey.

What if my employer says their severance offer is ‘final’ and non-negotiable?

While some employers may claim their offer is firm, this isn’t always the case. Employers often present their initial offer as “final” to discourage negotiation. However:

• In individual terminations, employers may still improve their offer if they perceive legal risk or if you present valid concerns.
• In group terminations (RIFs), exceptions are possible if you have a strong legal claim or pending action.

Conclusion

We understand that being terminated can be a stressful and disorienting time. While severance negotiations may feel overwhelming, understanding your rights and options can help you feel more empowered.

Negotiating a severance package can be a critical step in securing your financial and emotional well-being after a termination. Employing an experienced employment attorney can dramatically improve your chances of negotiating a better severance package.

Contact the Ruggles Law Firm at 916-758-8058 to Evaluate Your Potential Lawsuit

Matt Ruggles has a thorough understanding of California employment laws and decades of practical experience litigating employment law claims in California state and federal courts.  Using all of his knowledge and experience, Matt and his team can quickly evaluate your potential claim and give you realistic advice on what you can expect if you sue your former employer.

Contact the Ruggles Law Firm at 916-758-8058 for a free, no obligation consultation.

Blog posts are not legal advice and are for information purposes only.  Contact the Ruggles Law Firm for consideration of your individual circumstances.