A layoff is an involuntary suspension or termination of an employee due to business reasons such as downsizing. As many as 7.7 million people lost their jobs in the US after the pandemic hit. Many of these job losses were layoffs. This article will explain what being laid off means and how you can get back on your feet.
What Does it Mean to be Laid Off?
In times of crisis, businesses have to lay off people to stay afloat. The most common reasons for layoffs are buyouts, downsizing, cost-cutting, and mergers. A layoff is this involuntary separation between the employer and employee because of business reasons.
Laid Off vs Fired
Is being laid off the same as being fired?
No. In cases of layoff, the employee is not at fault. It usually happens when businesses do not need the position anymore. Layoffs usually happen because of the changing needs or priorities of businesses. On the other hand, people are fired because of their actions or inactions such as poor performance, bad conduct, sexual harassment, to name a few. Being laid off and being fired are different forms of dismissals.
Laid off Unemployment Benefits
You can collect unemployment benefits for up to 26 weeks or until you find work (whichever is earlier). However, exact rules vary from state to state.
There are some guidelines you have to meet to get unemployment insurance benefits. For example, you have to show that you were dismissed through no fault of your own. Furthermore, you need to have earned a minimum amount of wages or worked for a particular time to be eligible. The exact wages earned or time varies from state to state.
The Seven Questions Laid Off Employees Need to be Answered
Now that we are done with the basic concepts of layoff, we can discuss the answers to some frequently asked questions:
Q1: When will I get my final paycheck? What will happen to my vacation time if I haven’t used them?
First things first, if you think that there is a chance you will be laid off (or you have been laid off, meaning dismissed from work involuntarily), figure out how much savings you have.
If you are still employed, increase the amount of money you save every month and avoid unnecessary expenses until the economy stabilizes.
If you are laid off, cancel subscriptions you don’t need and apply for unemployment benefits. These benefits will unburden you and release financial stress.
Communicate with HR to find out what your final paycheck will be and when you will get it. Then, ask them if you will get paid for the vacation time off that you did not take. Since state rules vary so widely in the United States find out if your state mandates your company to pay out paid time off.
Q2: Will I get severance pay?
Severance pay is the package and benefits provided to a person after he is “severed” from a company. These packages come in various forms and depend on your terms of employment. The severance package might also include healthcare benefits, career transition services, among other things. However, the usual practice is paying off employees with a lump sum paycheck. There are no laws at the federal level that mandate employers to pay severance pay.
In recent times, New Jersey has passed legislation that mandates companies to give 60-days advance notice before laying off an employee along with severance pay. Although this is only applicable for companies that employ a hundred employees or more.
Receiving a lump sum paycheck sounds good. However, people spend extravagantly when they get access to a lot of money. To protect yourself against financial insecurity, you need to make a monthly plan following the lump sum you have received. Then, ask yourself:
How long would it take for you to get an equally paid job?
Can you pay the necessary expenses for the next few months?
Job layoffs can be hard and companies know it too. If you feel like you need something specific, do reach out to HR For additions to your severance package. Sometimes, companies can give you additional ancillary services like career transition consulting.
Q3: How long before I can exercise my stock options?
Many companies offer stock options to their employees. Stock options are a way for companies to offer ownership to their employees for less than the stocks’ market price. By doing this, employees have a stake in the company. If you have been laid off, you should ask the organization about how much time you have to wait to use your stock options.
Furthermore, ask them if you will have to forfeit some stocks due to the layoff. However, the market is volatile right now, and you might not get enough money from your stocks. It is best if you wait to exercise your stock options to maximize value.
Q4. Will my healthcare coverage continue even after I have been laid off from work? If yes, then how long will it continue?
The terms and conditions of your organization’s agreement with the healthcare provider will determine if an employee can get coverage after they have been laid off. Contact HR to determine your company’s healthcare coverage and how long it will cover your healthcare after your layoff.
Q5. Should I ask the company for a reference?
Businesses only lay off employees when they’re struggling to stay afloat. Employees are not at fault and shouldn’t hesitate to ask for references.
Discuss your situation with your bosses and ask them for a reference so that it will be easier to find a new job. Prospective employers will want to know why you left your last job. In such cases, a reference from your bosses can clear their doubts. Keep in mind that prospective employers may want to talk to your boss directly to answer any questions.
Q6. How can I get hold of my performance reviews? Will my employer release them?
Performance reviews can come in handy in getting your next job.
Prospective employers will want to know how you performed at your last job. Performance reviews are useful to gauge the work ethic and skills of potential employees. If you have not saved yours, you can ask HR for them.
But for future reference, be sure to always have a record of your achievements and performance reviews. Additionally, you can also get a letter of recommendation from your boss in writing to improve your chances of landing a new job quickly.
Q7. What is going to happen to my 401(k) after I get laid off from work?
For high-income earners, it is suggested that they ask the employers to contribute the most they can to their 401(k) plan. One can contribute a maximum of $19,500 if they are under fifty years old and $26,000 if they are fifty and above. What happens to your 401(k) after you are laid off depends on the kind of plan you have. You can contact your employer to find out what will happen to it and consult a financial advisor as well.
Does Getting Laid Off Affect Your Job Search
Getting laid off does not carry the same stigma as it once did. With the pandemic, millions of talented and skilled employees have been laid off because businesses were struggling to continue operations. Prospective employers will understand your situation as you could not have done anything in this scenario.
Even otherwise, laying off happens because of changing business needs and priorities. You will be able to address the gap in your resume when you are searching for jobs.
Steps to Take After an Unexpected Layoff
Layoffs are a stressful event. However, you can do the following things to regroup and move forward quickly:
Figure out Where you Stand Financially
This step is the most crucial of all. After factoring in your severance pay, figure out for how many months you can stay afloat with just your savings. Stop your unnecessary expenses and maintain a more bare-bones lifestyle. Save as much money as you can until you get a new job.
Remember that you will need to pay taxes on your severance pay. The factor that in a while figuring out the situation. Make a financial plan for the next few months and try to stick with it.
Assess Where You are and Where You May Want to Go
Layoffs can be a blessing in disguise for some.
Were you happy at your last job?
Is there anything else you wanted to do for a long time but weren’t able to because you were in a cushy job?
You can assess your situation and regroup. If you have the time and resources, you can also go in for additional training or mentoring. Maybe this could be the opportunity for you to chase after the position you always wanted but never had the drive, courage, or time to pursue.
Look for Part-Time or Freelance Work
With many full-time jobs suddenly being made redundant there is an opportunity for potentially lucrative part-time work for talented professionals. If your skillset is something that can work for a multitude of companies consider freelancing with some.
Part-time and freelance work can tide you over through testing times. They can help you stay afloat while you look for something more stable. Remember that money can dry up fairly quickly if you are not earning.
If your skillset includes skills like coding, digital marketing, graphic designing, or video editing consider freelancing seriously. These are highly sought-after skills and can be even more lucrative than a full-time job.
Take Care of Your Mental Health
Being laid off is hard. But being laid off in the crapstorm that is currently taking over the world can be even worse. As physical health is taking center stage, mental health is often taking a plunge for many.
Understand that we’re all in this together and don’t keep your emotions bottled up. Talk to your friends and family about everything that you’re going through. Share, bond, and recover together.
Being laid off is a challenging scenario. However, it is not the same as getting fired. Apply for unemployment benefits to tide you over for some time. Meanwhile, keep looking for a job that is suitable for you.
You can do this, we have faith in you. Reach out to us at @HarmonizeHQ if you need help and we’ll be glad to offer it.