What to do when you are made redundant or laid off

Most people find out in a meeting that lasts less than fifteen minutes. There is a manager, often someone from HR, a document, and a sentence that begins “as you know, the business has been reviewing.” Then your access is cut, and you are staring at a dead laptop screen with no idea what to do next.

The next 48 hours matter more than they should, because decisions made in shock tend to be bad ones, and because the paperwork you are handed was written by the employer’s lawyers for the employer’s benefit. This guide covers those first two days, what to check before you sign, your rights in the US, UK and Canada (Australian readers should start with the Fair Work Ombudsman’s redundancy pages), benefits, telling people, and restarting the search.

The first 48 hours

Do not sign anything in the meeting. You may be asked to sign a severance or settlement agreement on the spot. Say: “I’d like to take this away and read it properly. When do you need it back?” Every employer expects this. Anyone who pressures you to sign immediately is telling you the document is not in your favor.

Ask for everything in writing. The reason, the effective date, what you are being paid and when, what happens to your benefits, and who your contact is from now on. Anything promised verbally (a reference, a bonus, extended notice) should be confirmed by email before the day ends.

Save what you are entitled to before your access goes. Your contract, payslips, performance reviews, your own contact list. Do not take confidential company material; that is the fastest way to lose a severance package. Your own employment records are yours.

Write down what was said. Who was in the room, what reason was given, whether others in your role were affected, whether the word “redundancy” or “performance” was used. If there is a dispute later, this note is the most valuable thing you will have.

Tell your household, then stop. The people who share your finances need to know today. Nobody else does. You will announce it better in a week, when you know what you want to say.

Then, that evening or the next morning, do the money sums. Our guide to handling money between jobs walks through it; the short version is: how many months can you cover with what is in the bank plus the severance? That number decides how much room you have to be choosy.

What to check before you sign a severance agreement

Read the whole document twice. Then check these specifically.

• The money. Is the payment what you were promised, and is it separate from what you are already owed (notice, unused vacation, earned commission or bonus)? Employers sometimes present statutory entitlements as if they were generosity. Anything you are legally owed is not part of the deal; it is the floor.
• The release of claims. Nearly every agreement asks you to waive your right to sue. That is normal, but if you think the selection was discriminatory, or related to a complaint you made, pregnancy, leave or a health condition, get advice before you waive anything.
• Non-disparagement. A clause saying you will not speak badly of the company is common. Check whether it is mutual, and ask for it to be if not.
• Non-compete and non-solicit. Check whether the agreement adds new restrictions or restates ones in your contract. A new non-compete is a real cost, and in some jurisdictions (California most notably) may not be enforceable at all.
• The reference. Ask for an agreed reference to be attached, even a bare confirmation of dates and title. It stops a future employer getting an ambiguous answer from someone who was not involved.
• Equity, bonus, pension. What happens to unvested options or shares, any bonus for the current year, and pension contributions through the notice period. These are often the largest numbers on the table and the ones people forget to ask about.
• Confidentiality. Check that the clause does not stop you discussing the terms with a lawyer, a union, a benefits agency or a regulator. It should not, and in most places cannot.
• Timing. In the US, if you are 40 or older, the Older Workers Benefit Protection Act gives you at least 21 days to consider an agreement waiving age-discrimination claims (45 days in a group layoff) and seven days after signing to revoke it. In the UK, a settlement agreement is only valid if you have had independent legal advice on it, and the employer normally contributes to the cost. In Canada, taking the document to an employment lawyer before signing is routine.

If anything is unclear, ask in writing. A one-line email (“Can you confirm whether the payment in clause 4 is in addition to my statutory notice?”) creates a record and often gets a clearer answer than the document.

Your statutory rights: United States

The US has less statutory protection than the UK or Canada, which makes the severance agreement more important, not less.

There is no federal requirement to pay severance; what you get is whatever your contract, your employer’s policy or the negotiation produces. Final pay rules are set by state; some require the final paycheck immediately on termination, others by the next regular payday.

The federal WARN Act requires employers with 100 or more employees to give 60 days’ written notice of a plant closing or a mass layoff (broadly, 50 or more employees at a single site, subject to the Act’s thresholds). If you got less notice than that in a large layoff, you may be owed pay for the shortfall. Several states, including New York, New Jersey and California, have their own versions with lower thresholds, longer notice or, in New Jersey’s case, a severance requirement.

Health insurance: under COBRA, employees of companies with 20 or more staff can generally continue their employer’s health plan for up to 18 months, paying the full premium plus up to a 2% administration charge. It is expensive but keeps existing cover intact. Compare it with a marketplace plan; losing job-based coverage opens a special enrollment window there.

Unemployment insurance is run by each state. Apply the week you finish, not the week the severance runs out; some states delay benefits during a severance period, others do not, and the clock generally starts from your claim date.

Your statutory rights: United Kingdom

In the UK, “redundancy” means a specific legal situation: the role is disappearing, not the person. A redundancy has to be genuine and the selection fair; if it is not, you may have an unfair dismissal claim.

Statutory redundancy pay applies if you have at least two years’ continuous service. It is calculated on age and length of service: half a week’s pay for each full year worked under the age of 22, one week’s pay for each year between 22 and 40, and one and a half weeks’ pay for each year from 41. Length of service is capped at 20 years and weekly pay is capped at a figure raised each April, so check gov.uk for the current amount. Your contract may provide more. The first £30,000 of a genuine redundancy payment is tax-free.

Notice. Statutory minimum notice is one week after one month’s service, then one week per complete year up to a maximum of twelve weeks. Your contract may give more. You either work the notice or are paid in lieu of it.

Consultation. Your employer must consult you before making you redundant, and where 20 or more redundancies are proposed at one establishment within 90 days, collective consultation is required, starting at least 30 days before the first dismissal (45 days if 100 or more). No consultation at all is a warning sign.

Fair selection. If you were chosen from a pool, the criteria should be objective and applied consistently. Selection based on a protected characteristic, or on having raised a complaint, is unlawful.

Challenging it. If you believe the redundancy is unfair, the route is usually an internal appeal, then ACAS early conciliation, then a tribunal claim, which must be started within three months less one day of dismissal. The qualifying period for unfair dismissal claims has been the subject of recent legislation, so check the current rule when you read this.

Your statutory rights: Canada

Canada layers three things: employment standards legislation (the floor), your contract, and the common law, which often entitles you to considerably more than the statutory minimum.

Most employees are covered by provincial legislation. In Ontario, for example, the Employment Standards Act requires notice or pay in lieu after three months’ service, rising by one week per year to a maximum of eight weeks, plus severance pay (one week per year, up to 26 weeks) for employees with five or more years’ service at employers with a payroll of at least $2.5 million. Other provinces have their own scales. Federally regulated workers (banks, airlines, telecoms, rail) fall under the Canada Labour Code.

The common law is where it gets interesting. Unless your contract contains a valid clause limiting you to the statutory minimum, courts assess “reasonable notice” based on age, length of service, the nature of the role and the availability of similar work, and awards of many months are not unusual for long-serving employees. This is why the standard advice in Canada is: do not sign the first offer, and spend an hour with an employment lawyer. The difference between the first offer and a negotiated one is frequently large.

Employment Insurance is federal. Apply as soon as you stop working, even before your Record of Employment arrives; waiting more than four weeks can cost you benefits.

Benefits, pensions and the things that quietly lapse

Beyond health cover, check life insurance and income protection (often tied to employment and gone the day you leave), employer pension contributions through the notice period, and professional memberships the employer paid.

Retirement accounts deserve a warning. In the US, cashing out a 401(k) early carries tax and usually a penalty; rolling it over preserves it. Raiding retirement savings to cover a few months is one of the most expensive decisions people make after a layoff, and rarely necessary once you have applied for the benefits you are entitled to.

Telling people

Wait until you have read the agreement and know your dates. Then tell close family, then the professional contacts most likely to help, then everyone else if you want to.

You do not owe anyone the full story. A line that works in nearly every conversation: “My role was made redundant as part of a restructure at [company]. I finished on [date] and I’m now looking for [type of role]. If you hear of anything, I’d be glad to know.” It is factual, not bitter, and it tells people what to do for you.

Restarting the search

Give yourself a week. Not a month, and not zero. A week to sort the paperwork, apply for benefits, tell people, and sleep. Then start, with a plan.

Redundancy is one of the easiest gaps to explain, because it was not your decision. Say it plainly: “The team was restructured and my role was eliminated.” Our guide to explaining a gap in your employment history covers the wording for resumes and applications.

If the money sums from day one were tight, prioritize speed. Our 14-day plan for finding a job fast when you need money now is built for this situation, and there is no shame in a bridging role while you search for the right one.

Your list for the first week

1. Do not sign on the day. Read the agreement twice; get advice if anything is unclear or the selection feels unfair.
2. Get every verbal promise in writing.
3. Work out how many months you can cover.
4. Apply for unemployment or employment insurance the week you finish.
5. Sort health cover before the current cover ends.
6. Ask for an agreed reference.
7. Take the week. Then start.

The most common regret people describe afterward is signing too fast. Everything else on this list can be fixed later. That one cannot.