Many tech managers and HR professionals like to give an employee the opportunity to resign before being fired. If you find yourself in this unenviable position, you have a conundrum: which option is best?
For example, can you still negotiate severance or claim unemployment benefits if you agree to quit? What are the pros, cons and consequences that come with each option?
Here are the key factors to consider when faced with the choice of quitting or being terminated.
What’s Behind the Decision?
Before you start comparing options, it’s important to understand the reasons why your company wants you to leave, noted Sudhir Singh, human resources consultant and CEO of Pro Orgs, Inc.
“Why are they giving you the option instead of just terminating you?” Singh questioned. Ask your manager and discreetly check with your colleagues—the reason may determine what you do next.
For instance, if you have reason to believe that you are being wrongfully terminated for illegal reasons such as your race, national origin, gender, religion, age, disability, pregnancy, or for being a whistleblower, don’t agree to anything or sign anything until you consult a lawyer. Let them terminate you.
“If you’re being wrongfully terminated, you have a lot of levers to pull,” Singh said.
On the other hand, if you’re being terminated for well-documented performance issues, it may be best to go ahead and resign. However, ask to remain on the payroll for a few weeks and receive outplacement or other support while you look for work. Under the circumstances, you may have more flexibility to ask for and receive concessions from your employer if you agree to quit.
Sometimes an employer may actually be acting in good faith. For instance, if the company has recently had a mass layoff (or there’s the potential for one on the horizon) and finances are strained, they may be doing you a favor by letting you leave now before the coffers are depleted.
Even if you are being asked to leave for performance reasons, it’s better not to commit on the spot, advised Amber Bissell, Bay Area labor attorney and managing partner of The Law Offices of Amber Lee Bissell.
Oftentimes there’s a false sense of urgency attached to these requests, but it is perfectly reasonable to ask for three to five business days to think things over and plan your exit strategy, Bissell added.
This will give you time to seek counsel, ensure that your rights are being upheld, and double-check that your employer is honoring the terms of any written contract or employment agreement you signed when you were hired. Most cities have resources that may be able to help you with free or low-cost legal help; many lawyers also offer free consultations.
Being asked to resign is emotionally destabilizing, Bissell added. Seeking professional advice will allow you to approach the process with a clear understanding of your rights and priorities.
Negotiable Items
Companies often try to pressure employees into resigning so they can avoid paying out a substantial severance package. But the terms of every firing are negotiable as long as you weren’t involved in some sort of misconduct.
Ideally, you’d like to move toward and negotiate a mutual separation agreement which spells out the timeline and terms of a unilateral decision to separate, Singh said.
Financial items that are usually up for negotiation include:
- The amount and duration of severance pay
- Continued company coverage for medical and dental during the severance period
- Payment of year-end bonus (even if prorated)
- Extension of the exercise date for vested equity and more
Consider the potential tax implications of a big payout (such as your bonus plus severance pay) and check with an accountant, especially if you expect to receive a lump sum. It’s okay to ask for a deferral until the new year if it will put you in in a lower tax bracket.
Note that severance and benefit agreements usually require a release of claims against your former employer—but there are exceptions, so again, consult a lawyer before signing.
Also, check with your state agency to ensure the details of your severance or the characterization of your separation from the company do not interfere with your eligibility for unemployment.
Employees have an unwaivable right to apply for unemployment benefits, and in many states, you may be eligible for unemployment benefits if you were forced to resign from your job.
Reputation Management
Some of the most crucial things to negotiate include how the news of your departure will be shared with colleagues and how the company will respond to external inquiries to verify previous employment and provide references.
Will HR tell prospective employers that you are eligible to be rehired? What will your former boss and colleagues say about you? Your professional reputation may be worth more than a few weeks of severance if it allows you to land another high-paying job right away.
Ideally, you’d like to have two good references from your colleagues in your pocket and at least a neutral reference from the company, Singh said.
Get It In Writing
Once you’ve agreed on an exit plan, make sure that all the terms are clearly documented in writing, Bissell cautioned. This should include not just the financial terms, but also any agreements related to benefits, references or other negotiated elements.
If your employer won’t give you a written agreement to sign, document everything in an email and send a copy to all the parties, making sure to keep one for yourself. A well-documented exit plan ensures that both parties uphold their end of the deal and allows you to focus on finding your next career opportunity.
