Beefing Up Your Job Loss Emergency Plan
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I wrote how couples, even when times are well for them at present, should have a job loss emergency plan handy should the unfortunate event happen to them.
Today I want to add another scenario for couples to consider when sitting down and talking about their finances regarding a job loss- severance packages.
This weekend I had some time to finish up and review a book focused on just that topic. How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye is Sam's (from Financial Samurai) guide to working out a severance package with your company that satisfies both parties.
Severance Packages – What You're Entitled To?
The right severance package can soften the blow of a job loss. However it means that you have to get laid off from your job and understandably, that can be stressful.
Companies, when squeezed financially (whether by shift in sales or their own doing), have usually used lay offs to to cut costs.
As part of an employee's termination, companies may or may not offer a severance package. According to the Department of Labor:
Severance pay is often granted to employees upon termination of employment. It is usually based on length of employment for which an employee is eligible upon termination.
There is no requirement in the Fair Labor Standards Act (FLSA) for severance pay.
Severance pay is a matter of agreement between an employer and an employee (or the employee's representative).
That doesn't mean that workers have no way to prepare.
Now some states, like New York, have laws like the Worker Adjustment and Retraining Notification (WARN) Act that require employees to give notice. (If you have information regarding applicable Canadian laws, please email and I'll link to it to help Canadian readers handle this scenario.)
Why Getting Laid Off from Work Might Not Be a Bad Thing
After putting in so much time and effort into your job, being laid off can be an emotionally draining experiences.
Add to that the financial implications and you can see how some will do everything in their power to not get laid off.
However there may be a couples of reasons that getting laid off can be a good fit for employees – provided that they get some financial cushion.
- You're burnt out from working at job so long and you want to switch careers.
- You've been working a side job, hoping to turn it into a full-time gig, but you don't have enough time to devote to it.
- Your company's finances are a bit shaky- perhaps they've cut hours for employee or have already started downsizing.
What if there is a way to leave while getting some money out of it? Would you feel more comfortable about the transition?
If any of these scenarios fit you, you may want checkout's Sam guide on engineering your lay-off.
Who Could Use Tips on Engineering Their Layoff?
I will be the first to say that this book not for everyone. Sam gets into details and scripts on what you need to do months and weeks leading up to the severance package.
This book is for someone ready to make a life change and they want a financial cushion handy.
Please don't think that this a guide about easy money. It's for those looking at putting in some work now to get the results they want.
You need to know which players to work with in your company so you can maximize your lay off. You don’t want to burn bridges. To make it successful, you have to be willing to work Human Resources – getting a severance package is a bit of an art and Sam shows you how.
If you want to negotiate a severance package that will ease the transition, please check out his book on How To Engineer Your Layoff.
Using a Severance Package to Jump-start Finances
I'd love to hear from you. How many of you had to deal with a job loss? Were you able to get a severance package that allowed you to transition to your next career?
How did the two of you work it out? How long did it take for you to find a comparable job?
Disclosure: This post does contain affiliate links.
Thanks for doing a review! I spent another three months synthesizing new strategies I’ve learned since the first publication in 2012, and adding about 50 new pages to the book for 2016 and beyond.
I really hope more people empower themselves with the knowledge and rights they have as an employee. You have more than you think! Given there pensions are rare nowadays, there is no more backstop. Everybody needs to one day leave a job. When that day comes, hopefully people know how to negotiate an exit so they can have a financial runway to do whatever they want.
Due to being able to negotiate a severance, I felt much less fear leaving a job I had for 11 years, and an industry I worked in for 13 years. The severance package, which is still paying out four years later due to my deferred compensation, has also allowed me to build my online business at my desired pace without pressure to have to make money right away.
Never quit, get laid off folks and negotiate a severance! If you get laid off, you can potentially get a severance, unemployment for 26 weeks, COBRA health care, better recommendation letters, WARN Act pay, and so much more!