6 tips to survive a layoff!

By BankBazaar | May 6, 2014

What is Layoff? Layoff and downsizing can be used interchangeably. It refers to the termination of an employee due to business reasons such as cutting costs and increasing profits, optimum utilization of resources etc. Layoffs are very common especially during economic turbulence or a recession. When a business slowdown occurs and the company goes through financial crises, one of the way to stay alive is to cut cost through workforce reduction.

A Layoff is a type of Involuntary termination of contract of employment by the employer that is informally called “being fired”. Here, the “layoff” should not be confused with the termination due to poor performance or on disciplinary grounds. Involuntary termination can occur due to:

  • Layoffs, also called workforce reduction activities (Employee gets laid off),
  • Poor performance on the part of the employee (Employee being sacked)
  • Termination on disciplinary grounds (Employee being sacked)

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To be sacked, is generally thought of to be the employee’s fault such as misconduct or unsatisfactory performance whereas a layoff is usually not strictly related to personal performance, but instead due to economic cycles or the company’s need to restructure itself, the firm itself going out of business or a change in the function of the employer (for example, a certain type of product or service is no longer offered by the company and therefore jobs related to that product or service are no longer needed).

When we laid some people off at Apple a year ago, or when I have to take people out of their jobs, it’s harder for me now. Much harder. I do it because that’s my job. But when I look at people when this happens, I also think of them as being 5 years old. And I think that person could be me coming home to tell my wife and kids that I just got laid off. Or that could be one of my kids in 20 years. I never took it so personally before. Life is short, and we’re all going to die really soon. It’s true, you know. -Steve Jobs, 1998.

c

All the companies follow a separate layoff policy designed by their HR. On one hand, some of the companies follow a performance-based layoff strategy whereas most of the other companies simply shut down or eliminate the position regardless of the performance of an employee. Whatever may be the reason and style of layoff, if you are the one or among those who are loosing their jobs, it may be something unexpected, shocking and dealing with it may not be not easy for you. In that case, always remember:

A layoff is out of your control but your reaction to it is not!

Dealing with a layoff: In today’s volatile market, no matter how much better you perform, you should always be be prepared for these type of job turbulence. We suggest some Do’s and Dont’s when you deal and cope up with the stressful situation of getting laid off.

1. Severance pay: Don’t try to convince your employer to reconsider their decision. Your employer would have thought over it hundred times before laying you off. In maximum cases, layoff is the last measure that companies try for capping its cost. So pleading for your job doesn’t help. Rather, try to negotiate the severance package with your employer. Though not compulsory by law, most companies offer severance pay to employees who have been downsized. The amount you receive may vary, but it is generally one or two weeks of pay for every year of service. The employer has to pay the employees who resign of their own will and also to those who are forced to leave.

2. Collect all the dues: Acknowledge your emotions. You might feel miserable, shocked and disappointed. It is absolutely normal to feel such emotions. The workplace is not a good place to express this disappointment, however. Don’t feel bad if you feel confused and uncertain about your future. Give yourself some time. Acknowledge your emotions and make an action plan to move forward in life. Before you move on, pay attention to collecting all your dues with the employer. In case of layoff, the employer has to clear all the dues immediately on the last day of work. Check for your earned leave, unused Leave Travel Allowance (LTA), gratuity etc for the final settlement. Also, the employer has to continue the coverage of its Health insurance plan for a specified time as per policy.

“Life is like riding a bicycle, in order to keep your balance, you must keep moving.”-Albert Einstein

3. Smart Exit Plan: Once you are settled on emotional grounds, this is a time to reassess your career path and make sure you are still doing something you have an interest in doing. Consider the option of starting your own business too. However, you should be careful with the initial investment and the risk involved in each business. Take an expert advice and analyse your skills before making a final decision. Also, for starting your own business you might need to be 24X7 involved in the initial phase.

And if you wish to continue your career into a job, then update your resume, make the cover letters and start the job search. Reconnecting with your existing network also helps! Try to reconnect with your old contacts and establish new contacts by taking references from ex-colleagues. You can update your LinkedIn profile and keep in touch with ex-coworkers you had good relationships with.

4. Manage your finances and budget: If your company gave you a severance pay or settled your dues, then calculate how long you can survive with these finances. After that, you may have to depend on your previous savings. It is advisable to have enough savings that can help you pay for your living expenses for at least 3 to 6 months, in case of emergencies. At the same time, you need to squeeze your monthly budget, eliminate luxuries and focus on necessities. The use of credit card during this phase should be avoided as you may end up accumulating high outstanding balance with heavy interest rate and may get into a debt trap. You should rather prefer using cash during this period to avoid any further loans on your head. Avoid withdrawing your savings from your “Employee Provident Fund” (EPF) deposit as this has been set aside for your retirement.

5. Unemployment Insurance: Though most western countries provide social security and unemployment benefits, the laid off employees in India only have their provident fund deposits to depend on. Although, savings from the EPF can be withdrawn when unemployed but that should be used as the last resort in case of cash crunch. Several insurance players have started offering an unemployment protection cover and Income protection Plan as a rider or top-up to the critical illness or life insurance policies. You can check with your insurance provider to add this feature to your insurance.

6. Move-on and be prepared for the future: Although losing a job is very disheartening and is one of the most difficult experiences in life, but if you have a positive attitude to fight and bounce back, then you can surely overcome it soon. Spend some time exercising and keeping yourself in good health. Focus on and plan for the career you want to have in the future. At the same time, be prepared to be in this kind of situation for a longer period than expected. The layoff is a reflection of the poor economy and not your skills and abilities. So stay positive and believe in your capabilities.

Believe in yourself, and the rest will fall into place. Have faith in your own abilities, work hard, and there is nothing you cannot accomplish. -Brad Henry

No matter unemployment can be extremely stressful, but remember, its almost always temporary!

Disclaimer: Every company follows their internal HR guidelines that define the layoff policy. You may need to check with your company for their layoff policies. Some employers, at the time of appointment, let their employees sign the clauses of termination also.

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2 thoughts on “6 tips to survive a layoff!

  1. Avatarkeshav

    Thanks this was a good article I would definitely like to add a follow up question from Health Insurance perspective. after layoff how long the health insurance is to be continued by the group insurance plan that I had enrolled into. in case my employer is not responding to request for continuing the health insurance what can I do. thanking you in advance for your revert.

    Reply
    1. AvatarTeam BankBazaar

      Hi Keshav,

      A group insurance policy may not cover you once you are laid off. You will need to check with your employer for the details regarding this. If you already have a copy of the terms and conditions of the group policy, you can go through this to understand whether you will be covered in the case of a layoff and if so, for how long.

      Cheers,
      Team BankBazaar

      Reply

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