You can ask for severance pay when resigning by offering your employer something they actually want in return — a signed release of legal claims, a smooth transition, confidentiality, or a non-compete commitment — and presenting a written proposal with specific terms at the same meeting where you give notice. No federal law requires severance for a voluntary departure, so the entire conversation runs on what you can trade.1U.S. Department of Labor. Severance Pay
Check What You’re Already Entitled To
Before you ask for anything new, find out what you already have on paper. Pull your employee handbook, your original offer letter, and any employment contract, and read the sections on separation, notice periods, and severance. Some companies have written formulas that apply even to voluntary resignations.
If you belong to a union, your collective bargaining agreement controls and may set a payout formula your employer has to follow regardless of how you leave.2USAGov. Termination Guidance for Employers Some employer-sponsored severance plans are also governed by the Employee Retirement Income Security Act, which sets rules for how benefits are administered and disclosed.3U.S. Department of Labor. Advisory Opinion 1992-03a Whatever the documents already promise is your floor; the negotiation is about what you can add on top.
What You Can Offer That Makes Severance Worth It to Your Employer
Employers pay severance to resigning employees for specific reasons: they want protection from future lawsuits, they need a clean handoff, or they want enforceable confidentiality and non-compete commitments. Your leverage is whichever of those you can credibly offer.
A General Release of Claims
A general release is a document in which you give up the right to bring employment-related claims like discrimination, harassment, or wrongful termination.4U.S. Equal Employment Opportunity Commission. Q&A – Understanding Waivers of Discrimination Claims in Employee Severance Agreements Even if you have no intention of suing, that signed release has real dollar value to legal and HR, because a single employment lawsuit can cost far more than a severance package. This is the single most common thing companies pay for.
Confidentiality and Non-Disparagement
Companies worry about departing employees sharing trade secrets, client lists, and internal strategy, especially when the next stop is a competitor. Agreeing to keep proprietary information confidential and not to publicly criticize the company gives them contractual protection worth funding. There are legal limits on how broad these clauses can be, covered further down.
A Non-Compete Commitment
If your employer wants you to stay out of a competing role for a period after you leave, that restriction has a real cost to you and should be paid for. The Federal Trade Commission announced a rule in 2024 that would have broadly banned non-competes, but a federal court blocked enforcement and the FTC later moved to dismiss its appeal.5Federal Trade Commission. FTC Announces Rule Banning Noncompetes Non-competes remain enforceable in most states, though several restrict or ban them, so check your state law before agreeing to one or offering it as a chip.
Transition Help
Offering to train your successor, write detailed handoff documentation, or extend your notice period beyond two weeks gives the company something concrete. The longer and cleaner the transition, the stronger your case for compensation.
What to Put in Your Written Proposal
Draft your request as a short professional memo. Specific terms signal that this is a business proposal, not a personal favor, and they give HR something concrete to walk over to legal.
Cash Payment
A common starting point in private-sector negotiations is one to two weeks of pay for each year at the company. Five years of service would translate to five to ten weeks of salary. There is no universal formula, and the number should reflect your role, seniority, and what you are giving in return. Pick a specific figure rather than a range so the conversation has an anchor.
Health Insurance Continuation
Under COBRA, you can stay on your employer’s health plan for up to 18 months after you leave, but you pay the full premium (both the employer’s former share and your own) plus up to a 2 percent administrative fee.6U.S. Department of Labor. COBRA Continuation Coverage Fact Sheet COBRA applies to employers with 20 or more employees. Average total premiums for employer-sponsored coverage run roughly $777 a month for individual coverage and about $2,250 a month for family coverage.7KFF. 2025 Employer Health Benefits Survey Asking the company to cover some or all of your COBRA premiums for a set number of months is often the highest-value line in a severance package.
Accrued Vacation Payout
Whether your employer must pay out unused vacation depends on your state. Some states treat accrued vacation as earned wages that must be paid no matter how you leave; others let the employer’s written policy control. Either way, put the payout in your proposal so the amount and timing are documented.
Neutral Reference
A neutral reference clause commits the company to confirming only basic facts (dates of employment, job title, sometimes salary) if a future employer calls. Ask for the names of the specific people authorized to give references so the promise is enforceable. This protects your job search and protects the company from a defamation claim.
Outplacement Services
Some employers will pay for career coaching or job placement services. These programs run from a few hundred to several thousand dollars per person depending on the level of support. If cash is a sticking point, outplacement can be easier to approve because it usually comes out of a different budget.
A Specific End Date
Tie your final day to the transition tasks you promised: a trained replacement, finished documentation, a clean handoff. That reinforces that you are holding up your side of the deal and gives the company a reason to hold up theirs.
How to Deliver the Proposal
Bring your written proposal to the same meeting where you give your resignation notice, with your direct supervisor or a human resources representative. Handing over a document shows you have thought this through and keeps the conversation from feeling like an ambush. Follow up by email right after so there is a written record of the specific terms.
Expect the company to take several business days to review the proposal with legal. Counter-offers are normal. Employers often push back on the cash figure while agreeing to benefits like COBRA coverage, outplacement, or a neutral reference. Decide in advance which terms matter most to you so you know where to hold firm and where to give.
Extra Protections If You’re 40 or Older
If you are 40 or older and the agreement asks you to waive age discrimination claims, the Older Workers Benefit Protection Act imposes specific requirements. The agreement has to be written in plain language, has to specifically reference your rights under the Age Discrimination in Employment Act, has to advise you in writing to consult an attorney, and can only waive claims that arose before you sign.8Office of the Law Revision Counsel. 29 U.S.C. 626 – Recordkeeping, Investigation, and Enforcement
You have to be given at least 21 days to review the agreement before signing (45 days if the severance is offered as part of a group layoff or exit incentive program), and after signing you have another 7 days to revoke. The agreement cannot take effect until that revocation window closes.9eCFR. 29 CFR 1625.22 – Waivers of Rights and Claims Under the ADEA If your employer skips any of these steps, the age discrimination waiver is not valid, and you keep the right to bring a claim even after cashing the check.
Federal law does not set a specific review or revocation period for workers under 40, but a handful of states have started introducing minimum review periods for all severance agreements regardless of age, so check your state law.
Before You Sign
Watch for Overbroad Confidentiality and Non-Disparagement Language
In 2023, the National Labor Relations Board ruled that employers cannot offer severance agreements that require non-supervisory employees to broadly give up their rights to discuss working conditions, organize, or file complaints with government agencies.10National Labor Relations Board. Board Rules That Employers May Not Offer Severance Agreements Requiring Employees to Broadly Waive Labor Law Rights Sweeping non-disparagement or confidentiality clauses can violate federal labor law. Narrower clauses protecting actual trade secrets or proprietary data are still fine. If the draft you receive is sweeping, you have grounds to ask for it to be narrowed.
Understand the Tax Hit
Severance is taxable wages. Your employer withholds federal income tax at the supplemental wage rate of 22 percent, or 37 percent on any amount above $1 million paid in the same calendar year.11Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide Social Security and Medicare taxes also apply: 6.2 percent for Social Security on earnings up to $184,500 in 2026, and 1.45 percent for Medicare on everything with no cap.12Social Security Administration. Contribution and Benefit Base The flat 22 percent withholding rate may not match your actual bracket, so if the payout is large, plan on adjusting estimated payments or your W-4 at a new job to avoid a surprise in April.
Check How Severance Affects Unemployment
Severance can delay or reduce unemployment benefits depending on your state. Some states ignore severance and let you collect right away, some disqualify you only for the week you receive a lump sum, some spread the severance over multiple weeks and delay benefits until that period ends, and a few reduce your weekly benefit dollar-for-dollar during weeks severance is paid. The structure of the payout (lump sum versus weekly installments) can change which rule applies, so if unemployment is part of your bridge plan, look up your state’s rule before locking in the payment schedule.
Read Every Clause, and Consider an Attorney
Once both sides agree, the document is a binding contract. Read every clause before signing, and if there’s a release, make sure you know exactly which rights you’re waiving. If you are 40 or older, use the full 21-day review window and remember the 7-day revocation right after signing.8Office of the Law Revision Counsel. 29 U.S.C. 626 – Recordkeeping, Investigation, and Enforcement Regardless of age, having an employment attorney review the final agreement is usually worth the cost.