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The Power Of Negotiating An Exit Package

Trevor R. Thomas

Co-Founder + Partner
September 8, 2021

It is commonly known that employment relationships are built on a power imbalance; employers have the ability to offer job opportunities, pay employees for those opportunities, and dictate the terms of employment. Employees, on the other hand, are often in a position of financial need and fearful of losing their job. This power imbalance can lead to situations in which both employer and employee realize that the situation is no longer working, but neither are prepared to end it.

 

The employee does not want to quit because it can place them in financial uncertainty. Quitting a job will preclude the employee from accessing employment insurance benefits. Further, being forced out of a job through having to resign can be emotionally and psychologically difficult. The employer, however, does not want to initiate the termination. This could be because of a variety of reasons, but we often find that it is because they simply don’t know how. As a result, passive aggressive behaviors begin to create a toxic work environment. Ultimately, both sides suffer.

 

When to Exit and How to Do it!

When it becomes clear to the employee that they are no longer viewed as the right “fit” for the role, it may be time to consider negotiating an exit package. An exit package is an agreement between employer and employee about how the relationship will end. This provides significant benefits to both parties:

 

  1. The employee can have a hand in how the relationship will end, including the date, messaging (internally and externally), severance, and benefits continuation.

  2. The employer can avoid the humiliation of having to stumble through a difficult termination and explaining it to the team.

     

Exit packages can be a constructive option when termination may be too severe or potentially damaging to the remaining team.

 

Have questions about exit packages, or need help negotiating? Reach out!