One of the hardest practical things to deal with about a layoff is that it is unexpected for the person laid off. That means they don’t have time to take some steps that can benefit them post-layoff. Without having thought any of these issues through ahead of time, a layoff can catch anyone off guard and lead to the employee making poor decisions for themselves or simply being unable to optimize their options.
Broadly speaking, these actions can be broken down into four categories: Compensation, benefits, logistics, and looking forward.
Compensation
Compensation is both straightforward and also complicated because it consists of several kinds of compensation, even for the simplest layoff.
Your last paycheck
The most important and simplest is your pay. Your employer is required to pay you for the time you have already worked and for your notice period, whatever that might be.
For most corporate jobs, the notice period is two weeks, but any individual case may have a different notice period. The employer may or may not ask you to work during the notice period, but typically they do not want you to work.
Some states require that the final paycheck be delivered the same day as a layoff notice.
Severance pay
Severance pay is an interesting and complicated topic. For people in large corporate and startup industries, it can seem like a given, but for most other workers, it is a pretty rare occurrence.
Employers may seem to be paying severance to compensate people who were doing a perfectly good job for losing that job anyway. But there is no legal requirement to pay severance.
Most employers pay severance in return for two things. One is their reputation with the rest of their workers and with the larger business community and potential future employees. The other is to protect themselves against lawsuits.
When a company performs a layoff, it is doing it because aspects of its business are less good than it would like, so it needs to cut costs.
Sometimes a company does that by cutting a particular team or division that is not doing as well as it would like. Other times it is a broad layoff across the company where a certain percentage of employees are let go. Sometimes they double up and let go of people they see as low performing. Other times they actually pick people almost at random and provide evidence that those let go were not targeted by any identifiable category.
The goal for the company is to cut costs without being sued or causing any blowback later. So severance pay is contingent on signing a severance agreement that pays the employee in return for them waiving rights to sue.
Severance can range from two weeks pay up to months or even years in very extreme cases. Some companies pay it out based on time working at the company (a month’s pay per year worked, for example). Others just pay a set amount.
One important point. If you are laid off and not offered severance or offered a tiny amount, simply ask for more. There is no downside to doing so.
Stock and Options when you leave
Just like severance, there is no legal requirement for a company to deliver more of its stock or option benefits than have already been paid out. However, some companies do choose to prorate an option grant to the actual date of the layoff or even beyond.
The factors that are important for employees to remember are that the clock immediately starts ticking on stock option purchases. You’ll have a preset period of time to purchase your options or just abandon them.
Again, if the company does not provide any stock or option payouts in severance, feel free to ask. It can’t hurt.
One important point – once you leave a company, you will have 60 days to exercise any stock options (pay for the options), or you will be abandoning them.
Pay entitlements
There are some legal requirements that vary from state to state and country to country about what else must be paid when someone leaves.
Typically an employer is legally required to pay out any accrued but unused vacation. If you work in an unlimited PTO situation, however, there is no accrued vacation, so there is nothing to pay out.
An employer is also usually required to pay out any bonuses and commissions that have been awarded up to the layoff date.
There may be other entitlements as well, and normally the company will tell you about them and pay them out because the penalties for failing to do so if discovered at a later date are quite large.
The key takeaway, though, is to ask about each of these compensation options. Make sure you get what you should and that you have checked into all the options.
Benefits
The next set of actions is around benefits. Since COBRA became law, there are some benefits that you must legally be offered, but there are other areas, especially around retirement, that you should make sure you understand and look into.
Healthcare
The most basic is that anyone who works for an employer that has more than 20 employees and provides a group health plan to its employees is eligible for COBRA.
COBRA is a US government act that requires health plans to continue health coverage under an employer plan after they quit or are let go. There are some exceptions, for example, if you are fired for misconduct, but generally speaking, if the employer meets the criteria and the health plan meets the criteria, then you will be offered COBRA when you leave.
Usually, COBRA allows an employee and their family to continue their health coverage under the exact same terms but with one big difference – the employee pays the full cost of the coverage rather than being employer-subsidized.
For severance, some companies may offer other healthcare benefits in addition, for example, retaining employees for a period of time on their healthcare as if they were still employed. They may also extend other health benefits like access to concierge plans or mental health tools that were part of their overall healthcare package.
Retirement
A commonly overlooked part of severance is what happens to any retirement benefit there may have been. Legally companies are required to give you access to this and the opportunity to roll it over into a different plan.
Unless the employer has a particularly advantageous retirement plan, it is usually sensible to roll a 401(k) or another retirement plan over to either a new employer’s plan or to a consolidated retirement account that you maintain yourself. One reason is simply that fees and expenses increase the more plans you have, so for your retirement to build properly, you are better off keeping it all in one place.
Don’t neglect this part of your benefits, and make sure to ask any questions you have immediately.
If you work at an organization that has other retirement arrangements, like a pension, make sure that you are given all the information you need about what will happen now that you are leaving. If you haven’t reached a vesting date, then ask if there is any way to pay or contribute to buying out vesting or finishing it so that you get a better benefit. You’ll need that information to make an informed decision.
Layoff logistics
When you leave
In a layoff, employers can treat employees very differently. Some companies want everyone out right away and ask employees to leave as soon as the severance paperwork is completed or even before. Others grant employees the rest of the day to clean out their desks and say goodbye to coworkers.
Rarely do employers do a layoff but still ask employees to work through a notice period. Usually, the goal is to cut costs and move on, so it is most common for the day of the layoff to be the last day.
Companies that ask employees to leave right away are concerned about disgruntled employees causing problems or simply that they don’t want the employees staying on to be affected. Even if employees are given the rest of the day to pack up and say goodbyes, employees usually leave pretty quickly anyway.
However, the day an employee stops working may not be their last legal day of work. Typically, if an employer is honoring notice periods, then the legal last day is at the end of the notice period, and some employers may extend that date even further as part of a severance agreement.
Cleaning out your desk and returning equipment
Prior to the pandemic, when most employees worked onsite most of the time, returning equipment just meant leaving it at the desk. But with remote work, the employer will usually arrange to have it picked up or send pre-paid packaging to have it shipped back.
Cleaning out your desk is also straightforward for in-office employees. With remote work, there may be nothing in an office to pick up, but if there is, make arrangements to be met at the office so you can get whatever there is of yours that you would like to keep.
Documents
The first thing to do is to get copies of all the documents for your layoff. There could be a great many of them but if possible, get some form of documentation for everything pertaining to pay and benefits.
You should get a document outlining any severance package, including what you will get and details on how to proceed with each piece.
If there is a severance agreement, make sure you get a copy of it. If it is complex and hard to understand, you do not have to sign it right away. Instead, let the company know that you will return it once you’ve signed. You always have the option to consult an employment attorney about the agreement.
You can also ask for companies of your employment documents from when you started if you don’t already have them. This will help in case there is any dispute about notice periods and your rights to any stock.
If the layoff is not contentious, then ask if you can have a letter documenting the layoff and the reasons for it. This will help with unemployment if you claim it. It will also help with getting onto a partner’s healthcare plan if you intend to go that route rather than COBRA. Finally, it will also help with a future employer who may want some form of documentation about your previous employment.
Networking and Communication
Sometimes in a layoff, employees are not given a chance to communicate with colleagues and arrange to stay in touch. Companies are likely to turn off access to email and work systems immediately, even before the layoff actually happens.
If you get the chance, reaching out to people you want to stay in touch with is one of the first things you should do. Send out an email with your contact info, or post it on Slack. These professional and personal contacts are important, and you want to take every chance to maintain the connection.
Ask the company why you, in particular, are part of the layoff. It may simply be that your team as a whole is being let go, or it may be that a certain percentage of employees are being let go, and you happen to be chosen.
If the reasons are nothing to do with your performance, ask for a letter of reference or if your manager or others will give you a reference for another position.
If you have time and access to systems, go over your time at the company and make a note of your achievements and any data that you can to back them up. If it is acceptable and does not violate company policies, make copies of work that might fit in a portfolio. All of these things will be helpful for building a better resume for future job hunting.
Ask if the company is offering outplacement services as part of the layoff. These are not often offered but can be invaluable for future job hunting.
Looking forward beyond the layoff
Once you’ve gotten the things you have to do out of the way, it is a good idea to take the rest of the day off.
You have to do the list of things above before you leave work for the last time because there is no other way to do them, but you aren’t going to be in the best shape to do anything else for the rest of the day or start planning your future.
You can take the rest of the week to plan for the future and consider what’s next. Instead of just jumping straight back into another job, maybe you want to take time off, think about entrepreneurship, or start a side hustle to insulate you from future employment issues.
Take some time to think about what you really want, including in a new job. We are going to follow this article up with another about what to do post layoff, so you may get some good ideas there.
Once you know what you want to do, you can plan for it properly. If it’s another job, then build a new resume carefully and tailor it to the job you want.
One last thing
Join now (iOS, Android), – so you can find out about potential layoffs before they happen and get the best advice on your current or future salary or get help with interviews. Blind has the best, anonymous advice from people at your current or potential future employers.
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