The buzzword now across IT companies is layoff. It is not restricted to IT companies but lay-offs are becoming more common even in industries like Retail, Telecom, e-Commerce etc., Wherever you look around, you hear companies laying off people, in thousands. Though it is agonizing, it is a reality which everyone has to face in today’s employment market.
In such a dynamic environment if you think you are vulnerable to layoff in your company, you can be well prepared to meet the lay-off, at the least, financially.
Typically these are the top nine areas of focus prior to and post the lay-off:
- Adequate corpus to meet the living expenses:
Set aside at least 6 months of your regular expenses in a Savings Bank account or Bank FD or a Liquid Mutual Fund. In addition to the regular expenses, you also make sure to include the monthly EMIs for loans, annual insurance payments, children school fees, if any. If you are able to increase the amount to cover 12 months expenses, nothing like it.
With your regular expenses taken care, you can feel more secure.
- Obtain a stand-alone medical/health insurance:
You have been all along been using your employer provided hospitalisation cover. But the time has now come to get your own standalone medical insurance. You need to be adequately covered to meet any emergency hospitalisation. In today’s scenario, any cover of less than Rs5 lakhs is inadequate. So, go ahead and purchase a medical insurance cover immediately for you and your family.
- Review your life insurance covers:
Most of the companies used to provide life insurance covers to the employees and as a result not many had gone for life insurance covers outside of their employment. The amount of cover required would vary on a case to case basis depending on the kind of liabilities and responsibilities of the person, but the thumb rule is to have a minimum of 10 times your annual salary.
- Set aside money for enhancing your skillset
It is proven that the Return on Investment (RoI) on learning is huge. Utilize the downtime to invest in catching up with the latest trends and techniques in your chosen area. With a boom in online learning programs this need not be as expensive as a regular course also. Remember if you can have the latest knowledge in addition to your past experience that will give you an edge for future jobs/engagements.
- Clearly understand your termination benefits
Often employees are not clear about the benefits to which they are entitled on termination including gratuity, leave encashment, retrenchment bonus etc. as well as the tax treatment for the same. Ensure that you read your terms of employment as well as retrenchment notice terms carefully so that you don’t miss out.
- Don’t withdraw the PF balance immediately:
There is no need to rush to withdraw the Provident Fund balance immediately on your layoff. You are still going to be active in the job market, so retain the funds in the PF account. It would continue to earn interest for the next 3 years, even if there are no further inflows in the PF account.
- Review your monthly investments and spends:
Critically review the monthly investments and spends and stop those which are non-critical. Continue with the critical ones and save the precious funds.
8. Go after your friends to whom you have lent money:
You need to start collecting the hand loans given to friends and relatives to tide over the situation.
- Look for part time revenue options:
You can stretch your savings significantly if you can get part time work. This may even come from your hobbies/interests but it will give you the chance to meet new people, reduce the cash burnout while you look to get back to a main full time job.
Tiding over this tough period for anyone is crucial. At the least, you can reduce your financial worries in this period by focusing on the above.