What To Do If You Get Laid Off

by Connie Mei · 16 comments

Job security is something many of us take for granted too often. Whether it’s because of poor business or the fledgling economy, layoffs often times take employees by surprise. Even if you’re performing well at work, you should always be prepared to lose your job just in case. As with anything in life, you never know what could happen and that includes losing your primary income.

So what do you really do if you get laid off? Taking these 5 steps will help you get back on your feet more easily:

Don’t Panic

First off, take a deep breath. Don’t let yourself go into panic mode. Yes, getting laid off is awful. And yes, it’s normal to be upset, angry, or sad. Take a few days to let it sink in. While it may be hard to keep your emotions in check, try to remain as calm as possible so that you’re level headed when thinking about your next moves.

Understand the Terms of Your Termination

Being laid off can be be much more complicated than you think. Before you walk out the door for good, make sure you properly understand the terms of your termination. Often times, HR will give you a letter of termination. While these are fairly standard and are used to protect the company against wrongful terminations, take a day to read through the document before you sign on the dotted line. Don’t hesitate to ask your HR department if you have any questions. It may even be wise to consult a lawyer if something smells fishy.

There are other details you want to make sure you hash out too. If you are getting a severance package, understand the exact payment amount and when they expect to pay you. If there are different options, make sure you understand the long term consequences of the decision you are about to make. Also ask when your benefits will start and when it’ll end. Lastly, this may sound like a no-brainer but confirm your last day with the company so that you know when that last paycheck will come.

Organize Your Belongings

If you’re laid off, you’ll be expected to leave the company either immediately or in the near future. It’s smart to begin to organize your belongings, both physical and digital. Start to pack up your personal items from your desk to ensure you don’t forget them. If you have any personal files on your computer, back them up so that you have them for your records. However, as a disclaimer, you should not be taking anything that is company property, whether physical or intellectual.

Reach Out to Your Network

Once you’ve processed everything and are ready to take your next steps, start thinking about reaching out to your network. Let connections in your industry know that you are available for hire and looking for new opportunities. This can be done simply via LinkedIn and through email. While you might not hear from anyone immediately, this will help you gage the industry and see what’s out there. And if you’re in luck, you might just know someone who knows someone who is hiring.

Many companies also offer assistance for job placement. Speak to your HR department about whether this is a possibility.

Plan the Next 3 Months

Taking anywhere from 3-6 months to land a new job is typical, so plan for a few months without having additional income, just in case. Redo your budget and cut back where you can. Understand when your investments will pay you and plan out your cash flow. You may have to temporary switch dividends to be paid out to the checking account instead of having it reinvested, and doing so earlier may save you a small amount of commissions and headache. The best case scenario is that you will find a new job quickly, but it could take months in a volatile job market. Be as prepared financially as possible.

David’s Note: Did you listen to what Connie just said? It could take 3, 6 months or even longer to find your next job. I know the economy is humming along and no one is really thinking about getting laid off, but the good times is the perfect time to get financially prepared. Do you have an emergency fund to deal with a job loss, or at least a way to pay for your expenses without a paycheck? Know exactly how you are going to deal with no employment income before the situation happens. I don’t have a separate emergency fund, but I can cut back on some discretionary expenses and start using the interests and dividends from my investments to tide me over the potentially difficult period. Do you have the resources, and do you know how to deal with a financial emergency?

Being laid off is never a good experience, but it could be a blessing in disguise and lead you to bigger and better opportunities. Being prepared will help ensure a smooth transition.

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{ read the comments below or add one }

  • freebird says:

    My answer to your title would be “celebrate”. I’ve been financially independent of my paycheck for years now and have been waiting for an excuse to retire early. Severance of about a year’s pay would be a nice parting gift. No more resumes or job interviews for me, my next stop is Margaritaville.

    Unfortunately I work in a tech industry where my product specialty is rapidly becoming obsolete. This actually reduces my chances of getting pinkslipped, because even though business isn’t growing this product still makes good money and a lack of willing new entrants (both competing companies and new employees) means it’s hard to replace us. It also explains why my employer doesn’t mess with age-discrimination. Eventually as demand for this old product line fades, I’m sure I’ll be let go, but as my manager advised “don’t hold yer breath”.

    When I started out decades ago I never expected to be working in this nirvana environment. Of course it feels relaxing now because I saved hard early on and reached FI. If I weren’t I’d probably be stressed out about all the uncertainty. So my message to young folks — making the early sacrifices is so worth it even if you end up later winning the lottery.
    And don’t count on a late surge in retirement savings, do it early.

    • David @ MoneyNing.com says:

      Great advice as usual freebird.

      Would it be weird to wish you luck in getting laid off soon? 🙂

  • Cory says:

    I believe the most important point is not panicking after being laid off.

    If you have a plan for what you can do to get back on your feet after being laid off then you begin to panic, all of a sudden that plan goes out through the window.

    Once you stay organized and manage your finances in an efficient way, you can still live a normal life without compromising too much. It also makes getting that next job less stressful.

    • David @ MoneyNing.com says:

      That’s why I like being prepared so much. You can figure everything out when you have a level head and once you are in the heat of the moment, you just have to follow the plan.

  • Fritz says:

    I like to live under my means and save up as much as possible. I make sure to have at least $5000 in savings for emergency. I was laid off a few years ago and it took me a while to get back on my feet but thank God I saved enough money to last me during my drought.

    • David @ MoneyNing.com says:

      Your discipline saved you there, so pat yourself on the back Fritz.

      It’s hard to get people to save up for an emergency fund, especially when the stock market is doing so well as everyone wants to be fully invested. However, accidents do and often happens. A minor setback can become a major turning point for the worst in your life without some type of a financial cushion, so treat the emergency fund as insurance!

  • Alley Kaye says:

    Another thing I’d add: don’t burn your bridges.

    When getting laid off or fired, you may be tempted to stomp out the door uttering every expletive in the book, but that’s an urge best resisted. You never know when that company’s fortunes may shift or a former co-worker may decide to branch out on his/her own and need your services once again. I know, I’m doing freelance work for an employer who laid me off (through no fault of my own) as we speak!

    • David @ MoneyNing.com says:

      Thanks for bringing up a really important point Alley. It’s common for folks to start venting at their exit interviews but writing up the superiors or the workplace never benefits those who are leaving.

      They all say it’s confidential but why risk it if there are absolutely no benefits to you for speaking out?

  • Easy F says:

    The first time I was laid off I first panicked and thought the world was going to end and got slightly depressed because I felt worthless, but I eventually got it together and decided it would be a good time to start a new chapter in my life. I took my time that I was unemployed (which wasn’t too long thankfully) and really re-evaluated myself and my lifestyle choices and it ended up being a blessing in disguise.

    These are some great tips that I wish I could have read a few years ago. Thanks for sharing!

    • David @ MoneyNing.com says:

      You really never know if something bad will turn out to be good until far into the future. And if you openly accept and optimistically move forward, you can dramatically increase the chance of a good outcome. Cheers that you were laid off!

  • Dave says:

    “Being laid off is never a good experience, but it could be a blessing in disguise and lead you to bigger and better opportunities.”

    This is exactly what happened to me (which I talk about a bit at my blog). I got laid off in February and got out of a toxic environment that just went more south as time went on. Two of the other friends I made at the company are gone now too, so a big reason I liked working at the company is gone. 🙂

    I’ve got more tips on my blog, way back in some of the original posts, but this is a great read! Cutting back on expenses ASAP is critical especially if you’re not in an industry/position where you expect to be back to work quickly. I was out of work in a high-demand industry for about a month so it wasn’t so bad…I got lucky.

    • David @ MoneyNing.com says:

      You are right Dave. It never feels good to be told that you are being let go but leaving a company can be the best thing that can happen sometimes. It’s what you make out of it that counts!

  • Oliver says:

    It’s always best to be financially prepared as an employee so in an unexpected instance such as being fired, supporting yourself won’t be that difficult in the next few days, weeks or months.

    • David @ MoneyNing.com says:

      You are absolutely right Oliver. Now work on that emergency fund and no emergency will faze you!

  • Adriana says:

    I actually wanted to be laid off at my old job. Resigning would have meant no unemployment and no severance package. I resigned in the end, but only after properly planning for the next few months, just like you mentioned in the article.

    • David @ MoneyNing.com says:

      Sometimes you just have to jump Adriana. I have no doubt you are better off now than just waiting endlessly for a possible severance package. Good for you to be able to make the move.

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