Preparing for Layoff

There are six strategies workers can use to help you come out of a layoff in good shape.

Strategy 1: Look for possible clues of a possible layoff

If you're like Ford's autoworkers and you know in advance about a layoff, you'll be much better prepared. Be on the lookout for some layoff warning signs in your own company.

Some of these signs include expense reductions, hiring freezes, management resignations, travel cutbacks and your competitors cutting jobs. Keep in mind these aren't always signs of a layoff, but make sure you monitor your work environment.

Second, schedule, medical or dental work now, while you still have health insurance. Third, update your resume and actively maintain your network. Make sure you check in with members of your network with a quick phone call or e-mail.

If you want to expand your network, check out online networking services such as www.linkedin.com or www.ryze.com. These services let you sign up for free and you'll be able to connect with other members and invite colleagues so that your network is constantly expanding.

Strategy 2: Try to negotiate a better package from your employer

If you're part of a union, your separation package is primarily based on how long you've been with the company. Terms vary by union contracts, but if you're in a strong union like the autoworkers, you'll generally get a more generous severance package.

If you're a non-union employee, your separation package is also based on tenure. Generally, you'll get one to two weeks severance pay for every year, but it's also based on your level within the company. And surprise, surprise, a CEO's severance will far outweigh that of a mid-level employee, no matter how long and hard they've worked for the company.

And while it may be harder to negotiate in a mass-layoff situation, it's definitely worth your time to try.

Many times union separation packages will include training and re-skilling. For example, some workers may consider a second career as a licensed nurse or mortgage brokers.

With white-collar workers, most separation packages have outplacement services that will help polish your resume and find you a new position.

But if you want to start your own business, you may want to ask for a cash award in lieu of outplacement support. Or maybe you just want to move altogether. Get relocation assistance.

The trick to getting what you want is making sure you are respectful, your requests are reasonable and you give the reason behind your request. The worst they can say is no.

Strategy 3: Collect what you're owed - Keep your health coverage

There are some things to which an employee has a right after they leave. Health care coverage is one of them. COBRA is a federal law that allows you to continue your health care coverage up to a year and a half after you leave your job.

You generally have 60 days to decide if you want this coverage. If you have a pre-existing condition or you're going to be traveling overseas, you'll want to take advantage. But remember COBRA isn't cheap. You'll be required to pay full premiums and administration fees of 2 percent.

Most companies will pay your medical coverage through the month. So if you get laid off on January 30, see if you can push it to February 1. If you think you'll have another job lined up within those two months, or you're able to join your spouse's health care plan, you may want to rethink getting COBRA coverage.

You also have a right to whatever money you've collected in your 401(k) and your pension benefit plan. Don't forget to roll over your 401(k) or your pension into a Traditional IRA using a trustee-to-trustee rollover. You'll have more investment options for your retirement and you won't have to pay penalty fees that come with taking a cash disbursement.

Keep in mind that you can't do a direct 401(k) rollover into a Roth IRA because of tax laws, but funds may be transferred from a traditional IRA to a Roth IRA.

If you have a flexible spending account, you'll generally want to use your allotment before you leave the company. And don't forget those stock options. If you have vested stock options, check the price and decide if you should exercise them. If it makes sense, you'll typically have 90 days to do this. Otherwise, you'll lose them.

Strategy 4: Put Your Credit Cards Away. Minimize expenses.

Put your credit cards away, at least until you've paid them off and you have a new job. Out of sight, out of mind. Remove the temptation and take your cards out of your wallet. Try the bottom of your sock drawer, or entrust them to a friend or relative for safekeeping. You could even place them in a bag of water and throw it in the freezer. You'd have to wait for it to melt before you could use it, which would hopefully be long enough for your impulse to pass.

Strategy 5: Leave on good terms.

Walk out the door with dignity. You don't want to do anything spiteful.Before you walk out of the door, get a recommendation. Even if you're not parting on the best terms, remember that this job is going to be on your resume, so you may as well get a good review (or at least a neutral one).

If the layoff was a result of downsizing and not an indicator of your performance, a letter of recommendation that explains why termination wasn't your fault might come in handy.

Strategy 6: Do additional research. Watch your budget and expenses.

Do additional research. Check out the CPA profession's free website at www.360FinancialLiteracy.org for articles, calculators and resources to help you with personal finance issues if you lose your job. The website is free and it contains information on how you can better manage your budget/finances when faced with a personal crisis such as a job loss.

Take the Next Step

• How secure is your job? Modern statistics allows a calculation using key variables to give you a scientific estimate. Get your free estimate now.

If you enjoyed this article you might also want to check out:

• Preparing for a Potential Layoff
  
• My Story: Potential Layoff Revisited
  
• My Story: Finding a Job - Topic: Unemployment
  
• My Story: Unemployment Advice

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