Layoffs can be understandably stressful for everyone. It is an unexpected event that can create uncertainty and insecurity about the future. The loss of a job can lead to financial distress, which can create anxiety about meeting financial obligations.
Needless to say, it can also affect an individual's self-esteem and sense of identity, leading to emotional distress. Moreover, the process of searching for a new job can be challenging, and it may take a long time to secure a new position, which can create further stress.
Undeniably, layoffs can be traumatic experiences that affect not only the individual but also their family and social relationships, leading to a range of psychological, emotional, and social consequences.
Most importantly, layoffs can lead to financial distress in several ways. Firstly, if a person is laid off, they lose their regular income, which can lead to difficulty paying bills, making rent or mortgage payments, and meeting other financial obligations.?
Secondly, laid-off employees may lose their health insurance benefits, which can lead to higher medical expenses. Additionally, a layoff can reduce a person's retirement savings and cause long-term financial insecurity. It can also have a ripple effect on the local economy, reducing consumer spending and increasing unemployment, which can further exacerbate financial distress.
Several major corporations in the technology and media industries, including Twitter, Meta, and Microsoft, announced massive layoffs in response to decades-high inflation rates that hint at the possibility of a recession. Other industries, such as food, transportation, and retail, have followed suit, leaving workers to wonder if their jobs will be affected.??
If you've been informed that your job is among those affected by a mass layoff, you should make a plan right away to prepare for the significant financial changes that come with being laid off.
Under the Worker Adjustment and Retraining Notification (WARN) Act, certain businesses, such as those with 100 or more employees, are required to provide employees with at least 60 days' notice that their role will be impacted by a mass layoff or plant closing. The hope is that by providing advance notice, employees will have time to prepare financially in the event they are laid off for an extended period of time.
Contacting your human resources department for available severance packages, filing for unemployment to supplement your emergency savings, and having a strategy for dealing with your insurance are some of the best ways to manage your money after a layoff. It is also critical to examine your current spending habits and reduce unnecessary purchases while you are unemployed.??
When you are laid off, your employer will notify you whether you are eligible for a severance package outlining the financial terms of your termination. This usually includes severance pay and benefits based on how long you worked for the company before being laid off. It could also include unused paid time off or help finding a new job.
Most employees are unaware that severance packages, like employment offers, can be negotiated. For example, if you believe you are entitled to a larger severance payment than your company is providing, you may request that the payout be increased. Your employer has the option of accepting your offer or remaining firm on the initial payout amount.
Before accepting your severance package, make sure you thoroughly review it and understand the terms of the agreement. Accepting your severance agreement may imply that you waive your right to sue for wrongful termination or apply for unemployment insurance. You will typically have up to 21 days to accept the agreement.
It's important to note that there is no law requiring employers to provide severance packages to employees unless you belong to a union or your employment contract states otherwise.
If you lose your job, unemployment insurance can supplement your emergency savings while you look for a new one. It may take several weeks for your state to approve your application, so apply as soon as you know your role is going to be terminated.
Unemployment insurance eligibility requirements and application approval timelines vary by state, but most states require you to have worked for a certain amount of time or earned a certain amount of money to qualify. Your state may also use this information to determine how much assistance you are eligible for.
Before applying, make sure you understand your eligibility requirements.
Unemployment allowance is paid in India to employees who have contributed to the Employees' State Insurance for at least three years. The benefit is available for a maximum of one year and is equal to 50% of the average daily wage or Rs 35,000 per month, whichever is less. The government launched the "Atal Beemit Vyakti Kalyan Yojna" to provide unemployment benefits. Aside from the federal government, many states have their own programmes for assisting the unemployed.
In India, unemployment benefits are provided under a government-run insurance program called the Employees' State Insurance Scheme (ESIS). The ESIS provides temporary financial assistance to employees who have lost their jobs due to retrenchment, the closure of the company, or other reasons beyond their control.
Under this scheme, eligible employees are entitled to receive unemployment benefits at a rate of 50% of their average weekly wages for up to 90 days. To be eligible for these benefits, an employee must have contributed to the ESIS for a minimum period of two years.
It is important to note that the ESIS covers only a limited portion of the Indian workforce, primarily those in the formal sector. Furthermore, the amount of benefits provided is frequently viewed as insufficient to meet the needs of those who have lost their jobs.?
If you have insurance through your employer, your benefits usually end when you are laid off.
Rather than paying exorbitant fees to extend your current coverage, you may be eligible to enrol in coverage under the Affordable Care Act, which typically provides lower premiums based on your income level. If you are under the age of 26, you may also be eligible for coverage under your spouse's or parent's plan.
Create and stick to a simple budget. If you are relying on emergency savings or a variable income to get by after a layoff, you should review your expenses and categorise them into three major categories to help you cut back on unnecessary spending.
You should set aside a significant portion of your budget to pay your bills, which include mortgage or rent payments, utilities, food, gas, minimum loan payments, and insurance. This includes student loan payments, which are currently on hold until June 30, 2023, in the US.
In other words, your must-haves include your recurring monthly expenses. These costs should be your top priority, especially if you have a limited budget.
A smaller portion of your budget may go towards paying for things you want, such as travelling home for the holidays to see your family or purchasing a new outfit for a job interview. However, if you have recently been laid off, you should cut back on your discretionary spending.
"When the sky is falling down, you want to really tighten your belt a little bit," Japanese singer Hamasaki says. This could mean eating at home instead of going out to expensive restaurants or changing your holiday shopping plans.
If you do not have a job lined up, you may need to stretch your emergency savings to last longer while you look for a new position. If this is the case, you may want to put any extra money into savings for a rainy day. Furthermore, if you have credit card or consumer loan debt, you may want to make additional payments above the minimum to reduce interest charges.
Consider following the 50/30/20 rule, which allocates 50% of your after-tax income to necessities, 30% to wants, and 20% to savings or debt repayment.
If your employer has informed you that your job will be affected by a mass layoff, it is critical that you develop a financial plan right away so that you are prepared for the changes that come with losing your job.
Examine your severance package carefully, and don't be afraid to negotiate the terms, such as requesting an extension of your health insurance benefits, etc. If your employer does not offer severance pay, you should consider applying for unemployment?insurance to cover your immediate financial needs.??
For updates on the evolving world of work-life across the globe, visit our new section "RESET."