Downsizing - Before You Leave
by Deb Graminski
Your immediate superior has just been told that his position is gone, and he has three months to find another job. You and he have worked together on the same projects over the last year, and you are positive that you will also be 'let go', 'downsized', 'fired' or 'counseled-out'. What do you do? How can you get the best deal from your employer? Do a little research now and you can prepare calmly.
Do Your Research Now
There are a few things that you should investigate before you are officially told you are leaving. The first few months after being laid off will be a little easier if you can clear up any misunderstandings that could occur ahead of time.
Re-read your employee manual, checking for any policies currently in place about time and compensation at your level. Use this information as a starting point to negotiate a severance package. In one company, senior managers were given three months notice of termination, and were permitted use of their offices and secretaries during this time, which they used for job searches. Employees at lower levels in the same organization may find that no policies exist. Try to negotiate at least two weeks to one month of paid time before your termination becomes official.
While you are in the employee manual, double-check to see how your paycheck is computed. Are you paid in advance or retroactively for any time worked? Just because you send in time sheets at the end of each pay period does not tell the whole story. You need this information to know when you will receive your last paycheck. If you are paid in advance, your last check will correspond with the last day of the month that you work, for example, May 31. If however, you are paid retroactively, you would still have a paycheck coming after May 31 that would correspond to the hours you worked up to and including May 31.
Is there any money you owe your employer for travel costs, education, or expense reimbursement? If so, confirm the amounts and find out how you can pay the company back for these amounts. You may be able to have the amounts deducted from your final paycheck, or the company could demand a personal check. It is critical that you confirm the amounts, especially if you travel a lot. The amount the company says you owe could be substantial.
Check with your benefits administrator to see what happens to your health insurance and day care spending accounts when you leave. Your health coverage spending account may have hidden clauses that could work for or against you. Some plans cover bills up to the annual expected contribution, not just the amount in the account as of your last day. For example, if you had put aside $10 a pay, you would have $100 in your account as of May 31, your last official day at work. Your plan however, may cover bills up to $240, or the annual amount you elected to contribute.
Be careful though, your plan may have a second 'hidden' clause. In some cases, although you have until March of the next year to submit bills for reimbursement, only those charges incurred before your last day of work would be honored, not those incurred throughout the remainder of the year. When you work as many hours as most of us do, it is not unusual to schedule doctors' appointments toward the end of the year, so that you don't miss out on your reimbursement.
Knowing this before the ax falls means that you can schedule regular checkups before your last day at work. Day care accounts are usually structured more simply, with the amount available to spend equaling the amount you have paid in, but confirm whether you can send in a bill dated after your last day of work.
You should be able to keep your 401k account when you leave. You probably will not be able to contribute to the account or change the distribution after your termination date, however. Check the rules. You can usually change your contribution by simply filling out a form. If you are happy with your fund's performance, add extra money to it while you are still an employee.
Health insurance coverage
Under the federal COBRA (Consolidated Omnibus Reconciliation Act) law, most employers have to extend your health benefits for 18 months. So you shouldn't have to worry about being able to keep your existing coverage. What may be a shock though is the sticker price for this insurance. Your cost will be 102 percent of the premium, which is the actual cost to your employer, not the amount you have deducted from your pay. Most employers still contribute something to your premium as a benefit. It is very likely that you will have to pay double the amount you have been paying to keep the same coverage.
You have 60 days after you leave to sign up for COBRA. Try to get a better rate yourself during those 60 days. Check whether you can be covered under your spouse's plan. See if an association that you belong to offers health insurance. You can always pay the premiums for those two months retroactively if you still need coverage, or if you were sick or injured during that time.
During the Exit Interview
When you are told that your services are no longer needed, take a deep breath, and ask some hard questions now. Your supervisor has just had to look you in the eye and tell you that you have no job. He or she is uncomfortable. Take advantage of this. You will get more information now than you will later, when you are communicating by phone or letter.
Reason for dismissal
Find out what official reason will be given for your dismissal. Will you be eligible for unemployment? With three months' or even one month's notice of your impending unemployment, you will probably be able to find another job in the same field. If you feel that this is a prime chance for you to change careers, however, it may take longer. Unemployment is not the perfect answer, but may be an acceptable stop-gap measure while you re-tool your resume and take classes in your new field.
Letter of recommendation
This may also be a good time to ask your bosses and those higher in the organization to write a letter of recommendation for you. Some companies have official policies that prohibit this, but you may be able to get a personal recommendation from someone you worked closely with and who respects your work. Don't expect much here. Even if your leaving is considered 'amicable', few officers of the company would write a glowing recommendation for someone they decided should be separated from the company. It could leave them open to lawsuits.
Losing your job is an unpleasant event, but it does not have to be a crisis. A little advance planning can help you to manage the transition.
Debt is preventing me from taking a vacation this year or the vacation I'd like to take this year! Tell us: Yes, debt is affecting my vacation plans! or No, we're going exactly where we want to go but we'd love to learn make our trip as inexpensive as possible!
Deb Graminski is a freelance technical writer. In the past she has also worked as a consultant, but reports that both husband and daughter are much happier to have her near to them at home!
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