Losing a job is an emotional and overwhelming experience — your competence is questioned and you’ve lost some financial security. It can be especially stressful if you’ve been laid off since the job loss is likely no fault of your own.

But what you do when you get laid off determines your job prospects moving forward. While this layoff might be a setback, you can choose to learn from the experience to gain personal and professional growth.

What does it mean to be laid off?

When you get laid off, you lose your job because your employer can’t afford to pay you or no longer requires your services. But you’re not let go because you’ve done anything wrong. That’s why being laid off isn’t the same as being fired. When you’re fired, it’s because of your performance or larger issues like insubordination or absenteeism.

A company might need to lay off employees because they’re restructuring, shifting markets, or handling economic factors like a recession. Regardless of the circumstances behind your layoff, you may be entitled to compensation such as unemployment benefits, healthcare subsidies, and a severance package.

Should these circumstances change, your old employer may offer you your job back, but they’re not legally required to do so.

What to ask your employer when you’re laid off

To ensure you gain as many layoff benefits as possible and set yourself up for success moving forward, ask your employer these questions:

• When can I expect to receive my last paycheck?
• Will I be compensated for my unused paid time off or sick leave?
• Can I expect severance pay?
• What will happen to my 401(k) / pension plan?
• Will I have health insurance coverage after my last day of work?
• Will you provide a reference for me?
• Can I have copies of my performance reviews?
• How long do I have to access projects I’m working on (like a portfolio)?

What to do when you’re laid off: 9 steps

1. Know your rights

The first thing to remember is that you have rights as an employee during a layoff. Review your employment contract or handbook to see if it mentions a severance package and layoff benefits.

And don’t sign anything, like a termination agreement or layoff letter, until you’ve had a chance to review the terms of your separation. If something feels off, consult an employment lawyer to ensure everything’s legal.

2. Get it in writing

Ask HR to provide a letter confirming for future employers that you lost your job for reasons outside your control. These letters often include details about your accomplishments and contributions, so review them for errors or omissions.

3. Ask about a severance package

While companies aren’t legally required to provide severance, they may still offer to compensate you through a payout or other benefits, including unused vacation time or paid sick leave.

The longer you’ve been with a company, the more benefits you may receive. If you don’t feel the package is adequate, you can attempt to negotiate better terms.

4. Review your retirement plan

Whether you enrolled in your employer’s 401(k) or another pension program, review the plan’s terms to see what your options are. You might be able to leave these funds where they are for a certain amount of time or move them immediately to a personal retirement account.

Consult a financial advisor to determine the best move.

5. Secure healthcare coverage

If your employer supplied health insurance as part of your benefits package, you could choose to remain on the plan temporarily through COBRA continuation coverage. If not, you can apply for coverage from a private insurer or a government health care provider.

Losing coverage because of a layoff counts as a qualifying life event, meaning you can enroll in health insurance outside the typical enrollment period. This also means you might be able to join your spouse’s coverage.

6. Determine the details of your final paycheck

Depending on your termination agreement, you may receive your final pay immediately. Double-check the amount and deductions for any errors. If you’re part of a mass layoff subject to the WARN Act, you may be entitled to 60 days’ notice before termination.

During this period, the employer must continue to pay your wages and benefits, giving you some financial cushioning while job hunting.

7. Request a letter of recommendation

While ties are still strong, ask for a reference letter from your manager to give potential employers an accurate profile of your employee strengths, transferable skills, and performance.

8. File for unemployment benefits

While requirements vary between states, you may qualify for unemployment benefits. Receiving them takes time, so inquire about these benefits as soon as possible to avoid long breaks in income.

9. Adjust your budget

To try and maintain financial wellness throughout this transition, take stock of your personal finances to gain an accurate picture of all necessary expenses and non-essential items. Then, create a budget that should keep you afloat between jobs.