Been sacked?

Source: rocket50

By: rocket50 Staff

Date:   March 1, 2023

Been Sacked? Read this before you accept a severance package

No one likes to get “sacked” or laid off. It can be a very traumatic event in your life. It is a sudden end to everything you have known as “work” for the past years. It forces you to re-think your career and sometimes even your whole life. If you are over 50, this can be particularly unsettling because finding a new job may not be as easy when you are younger. However, it can also be the opportunity you have been waiting for to try something completely new; start a business or become a consultant.

So why are people getting laid off?

There are many reasons that a company uses to justify layoffs but regardless of the reason it always means that employees will lose their job. The most popular reasons include:  

• Down-sizing due to cost constraints
• Company restructuring to enable new ways of working
• Economic downturns that means less profit and/or sales 
• Mergers and acquisitions of new companies creating a duplication in roles or functions
• Buyouts where whole divisions are sold to another company
• Relocation of parts of all the business to a new state or even countryWhat Should You Do When You Get Laid Off?

Most companies will spend a lot of money on lawyers and consultants in advance of a downsizing to learn how to lay people off legally and cost effectively. However, it is not uncommon for mistakes to be made in the rush to execute lay-offs. So make sure that you have a layoff letter in writing. The layoff letter should explain the specific reasons for your layoff. Take the letter home and put aside the time to review all the details before accepting it. 

Understand your Severance pay

When lay-offs are announced, there is often a reference to a severance package being offered. You should expect to have a meeting in person or on-line with your boss and/or HR sometime after the announcement. They should explain what your specific package entails. This is usually a combination of years worked and age according to the policies of the company. 

If you don’t agree to the package or feel that you have a reason to make a legal claim (discrimination, ageism, etc.) then immediately consult a lawyer to see if you have a defendable cause. Don’t wait to do this. Later when everything has been finalized, it is quite rare that you can still build a case.

Always try to Negotiate

If you feel that you deserve a larger payment than what is being offered to you, it is always worth the effort to ask for more.  However, your rationale needs to be sound. Some of the reasons might include: 

• You worked in your role or in the company first as a free-lancer so actual time with the company is longer
• You were close to a promotion where your pay would have been higher
• You are entitled to bonus money for projects won that would have kicked in after your departure date
• There were promises made in your contract that were never realized.

If the company doesn’t buy your reasons for a monetary increase in payout, other items you can negotiate include: 

• Asking to keep your computer and/or phone, your car lease (if you have one), 
• An extension on your health benefits and any other perks that the company may have a contract for and will have to pay anyway   
• Outplacement (career counseling)
• Skill training 

File for Unemployment right away

In most western countries, if you have been formally employed (vs. freelancing) you will have been contributing to unemployment benefits during your employment so be sure to take advantage of this right away so that there is no time lag between your last paycheck and money coming in.

Depending on the state or country you live in, this is either a visit to the local unemployment office or an online site. In the USA, this is usually a state process, but you can start here US Unemployment. In Europe, this is on a country by country basis

Check your Health Care Insurance 

Your layoff package should clarify your health insurance options. But if it is not clear, than you should consult with someone in HR that manages this process. 

In the US, there are plans that can support you during a period of unemployment, called COBRA or The Consolidated Omnibus Budget Reconciliation Act. This is the law that requires employers to let their terminated employees stay on their existing health coverage plan for up to 18 months. 

Don’t forget to roll over your retirement benefits 

When you roll over your retirement plan distribution, you do not have to pay taxes on it until you withdraw it from the new plan. This way you are saving for your future as your money continues to grow tax-deferred. On the other hand,  if you don’t roll over your payment, it will be taxable and you may be subject to additional tax unless you’re eligible for one of the exceptions to the 10% additional tax on early distribution. There are many experts that can support you in finding the best option.

Don’t for forget to ask for references

When you are laid off, this is usually due to circumstances beyond your control. There is no reason not to ask for a reference. Some companies may have a strict policy and will only offer proof of employment but other companies may be more generous. It doesn’t hurt to ask.

In retrospect, many people realize that getting laid off is actually one of the best things that could have happened to them. Usually, the company wasn’t so great, hence the lay-offs. If this should happen to you, make sure all your bases are covered but don’t forget to consider what you learned from the process and stay in touch with the colleagues you enjoyed working with. They can be your best network for future opportunities!

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