Are you prepared if you lose your job? For 42 per cent of Canadians living to paycheque to paycheque, job loss could be catastrophic. With massive layoffs and corporate downsizing becoming the norm, today’s generation can no longer count on staying with the same employer for their entire career.
There are plenty of ways to prepare for unemployment outside of having an emergency fund. The Financial Consumer Agency of Canada (FCAC), an arm’s length Government of Canada agency, has developed a comprehensive guide for dealing with such an event. This guide is full of helpful tips, information and links to resources for dealing with job loss.
Know Your Rights
Job loss can come in many forms – dismissal, restructuring, and downsizing to name a few. Sometimes it can be a total shock – and sometimes you can see the writing on the wall. When confronted with this stressful event, it’s important to know your rights – you can’t assume your employer will always give you the severance pay you’re legally entitled to.
Your compensation will depend on a number of factors such as how long you’ve been with your employer and the reason for your dismissal. It could comprise of severance pay, termination pay, and vacation pay. Similar to minimum wage, severance pay standards are regulated by the government (although your employer can choose to be more generous). Employers are required to compensate you based on the statutory requirements in your province of work.
What You Need If You Lose Your Job
Similar to buying or selling a home, it’s a good idea to create a job loss checklist. Here are a few things you’ll want to do right away if you find yourself out of work:
- Apply for Employment Insurance (EI) – You’ve paid into EI all those years, so now it’s time to use it to help bridge the unemployment gap. You’ll want to apply right away, as you’ll have to wait several weeks before your benefits begin.
- Pension Plan – If you’re a member of your employer’s pension plan, you’ll have to make an election upon termination. If you’re retirement eligible you can start your pension right away (although it may be reduced). If you’re not retirement age you can choose to transfer your pension funds (although the funds may be locked-in). Be sure to hand in your paperwork right away, as there’s often a default option if you miss the deadline.
- Severance Package – It’s a good idea to review your severance package before signing on the dotted line. You should take it home for review to understand what you’re signing off on. If you think you’ve been shortchanged it may be worth getting a second opinion from a lawyer (although that can a lot of money when you’re financially vulnerable).
- Begin Your Job Search – It’s alright to take a few days off to reflect, but you’ll want to get in job search mode right away. That means dusting off your resume, tapping into the hidden job market through your network, and searching job posting websites like Workopolis and Monster.ca. The sooner you get started, the better. Even if you find a job right away, it could take several weeks before you start your new position, eating in your savings.
Job Loss Advice
Once you’ve been handed your walking papers you’ll want to cut back on discretionary spending immediately. Everyday spending we take for granted can put a big dent in your wallet – cooking from home, reducing your cable and cell phone packages, and taking public transit are some easy ways to save on your expenses.
There are several ways to help bridge the income gap. Depending on what’s offered to you, you may have the choice of receiving your severance pay as a lump sum or continuing to receive your regular pay cheque (known as salary continuance). It’s generally recommended that you have between three and six months of living expenses put aside for a rainy day. It’s a good idea to consider setting up a secured line of credit while you’re still employed – it’s a lot better than raking up a large credit card balance or selling your home when you’re out of work.