The Smart Girl’s Guide to navigating a volatile job market and a possible layoff

We speak with personal finance advisors, chartered accountants, HR consultants and career experts to understand the steps to be taken in the event of losing your job

The last few months have been nothing short of a nerve-jangling experience for employees, especially those working in the technology space. As conglomerates across the world, such as Amazon, Meta, Twitter, Accenture and Google, among others, announced mass layoffs, the tremors were felt in key markets such as India as well, with employees bracing for an impact–dreading every email, unsure if they had been served the virtual pink slip.

In a volatile job market, there are a few things employees can do to ensure that they are better placed to survive a layoff and land their next gig. Experts including personal finance advisors, chartered accountants, HR consultants and career experts have advice to offer, which will be handy even if you do not lose your job.  

Dissect the numbers

When you are laid off from your job, the most pressing issues on an employee’s mind are finance-related: How much income do I need to tide over this period? What are my financial commitments over the next few months? Do I have an emergency fund I can dip into? If you don’t already have a good handle on your income and expenditure, it’s time to get cracking on it. One way to approach this is to go over bank statements and credit card statements. This will allow you to identify which expenses are essential or fixed (rent, groceries, school fees, health, transport, utilities) and which are discretionary or changeable (travel, entertainment, eating out, shopping) should you decide to make lifestyle changes. It will also give you an idea of how long your savings or severance pay package is going to last you. It is then crucial to focus on the few areas that you cannot compromise on, says Vishal Dhawan, CEO and founder of Mumbai-based Plan Ahead Wealth Advisors.  

If you have a child, you are likely to have school or college fees to be paid. Secondly, there is insurance which already exists, as well as insurance that might be required in the event of a health emergency–this is for all dependents, including parents and parents-in-law. The third are EMIs on loans, and it is crucial to evaluate them. There may be a need for some restructuring if your cash flows are challenged and you don’t have any financial buffer in terms of other assets. The fourth aspect to look at is the income that you earn, and ensure that you don’t put it into high-risk areas. Avoid schemes that promise you high outcomes, as they are likely to be high on risk. Think pragmatically–in a high-pressure situation, most people tend to cut back on anything they think is discretionary;  for instance, if all your bookings are in place for an upcoming holiday and there is only a small incremental cost attached to it, it may be wiser to just take that holiday instead of losing money to cancel it. 

Maximise your tax savings 

If you get laid off from work, there is a good chance that you will receive your severance pay.  This is the financial compensation package offered by an employer to an employee upon termination of employment. However, receiving a large settlement could potentially catapult the employee into a higher tax bracket, especially if the pay-out comes towards the end of a financial year.

To mitigate the increased tax burden due to this unexpected additional income, employees can claim the relief under Section 89 of the Income Tax Act. For this purpose, the employee will have to furnish Form No. 10E before filing their income-tax return. “An employee can claim Section 89 relief from the severance pay or compensation received from the employer due to the termination of their employment. The relief is provided to neutralise the increased tax burden on the lump sum payment made to the employees, which is linked to their future services,” says Naveen Wadhwa, a chartered accountant and deputy general manager at Taxmann, a research and advisory firm. 

Another way to reduce taxable income is to invest in tax-saving instruments such as PPF, ELSS, NPS, medical insurance and so on. Furthermore, if the income marginally increases the slab rate post on which the surcharge rate applies, the employee can claim a marginal relief. 

Employees opting for Voluntary Retirement Scheme (VRS) are eligible for a one-time tax exemption. “The exemption limit for VRS is ₹ 5,00,000, and any amount received above this limit will be taxable as per the employee's tax slab rate,” adds Wadhwa. However, no exemption is allowed if the employee claims relief under Section 89 from VRS compensation. At the end of the day, a penny saved is a penny earned. 

Make your money work for you

When you receive your severance pay, there are several things to consider: Should I pay off my loans? Should I move it into a short-term liquid instrument or a long-term instrument? Should I pay my debt? This decision will depend largely on the construct of your finances. If you have a large emergency fund built up, then you are better off investing this money rather than using it for short-term needs. You could also consider paying off any expensive debt rather than keeping this money  liquid.

“Ideally, this is the time for individuals or the family to look at the overall financial picture and decide where to deploy it, ”says Dhawan. “You want your money to work harder for you at this time.” If you have an emergency fund to tide things over, you could put your severance pay into a liquid or overnight fund or use short-term fixed deposits for this purpose. If you have very high-cost debt, you may consider retiring that debt off. It has two advantages–-from a cash-flow perspective there is no EMI, and the interest amount is also saved. The money can be used for re-skilling, if need be. 

What if you have no savings? 

Building an emergency fund is important. However, if you’re caught at the deep end without a financial lifebuoy, there are some factors that can help you tide over the rough patch. “To begin with, consider taking some short-term loans from friends or family which can be returned as soon as you can make provisions for it,” says Dhawan. You could also partially withdraw your provident fund savings or retirement funds or even get a loan against it.

One could also liquidate savings in gold and silver. “These include gold and silver investments that exist but were never really thought of as an investment. They can be a useful alternative if you don’t have any emergency savings to fall back on,” says Dhawan. Additionally, one can consider an early encashment of investments such as saving-based insurance plans which are not critical. While you may need to take a slight hit on the policy in terms of surrender fees, you can encash it or avail of a loan against it. 

Stand out in the crowd

If you are in a volatile job environment, don’t wait to lose your job or be put in a difficult situation to start updating your profile or reaching out to potential recruiters–it should be an ongoing process. Start updating your profile on professional networking sites such as LinkedIn. “Failing to update your profile is probably the worst thing you can do,” says Ashish Chopra, HR consultant and recruiter for companies. “As a recruiter, my job is to find people on platforms such as LinkedIn. So if you’re not on it, I’m not even looking at your profile.” Chopra’s key tips for updating a profile are to ensure there is a picture on your profile, a concise write-up about what you have done in your career, and following people who might be inspirational for you. Moreover, it is important to be informed about what is happening with the leading companies on your wishlist and in the job market, more broadly.

It also helps to add intelligently to the conversations on these pages–for instance, you can leave comments on posts from industry leaders or companies. People are likely to notice if you make a valid or relevant point. It may pique their interest and they may end up looking at your profile. Another key thing you should do, according to Nirajita Banerjee, career expert and managing editor at LinkedIn News India, is to learn in-demand skills.

According to the 2023 Top Companies List for India which was released earlier this month, the data revealed that the in-demand skills top companies were looking for in the technology sector include Artificial Intelligence (AI), Robotics, Electronics, Software Testing and Computer Security. Companies in the financial sector were looking for skills such as Commercial Banking, Financial Accounting and Growth Strategies. There is also a growing demand for Industrial Design, Game Development. Partner Development and Inside Sales skills among gaming and EduTech companies. References and recommendations from your manager or employer can also catapult your profile on LikedIn, as recruiters are always looking out for those, says Disha Makaharia, HR consultant and recruiter, who has recruited for companies such as Walt Disney, Moët & Chandon and Conde Nast India. 

Network. Network. Network. 

Never underestimate the power of networking, says Chopra. “When a company or recruiter reaches out to you, go and meet them. No matter how big or small a company is, no matter how content you are in your job or with your pay. Have the first conversation, see this as an opportunity to build bridges. Even if the job is not up your alley, if you make a good impression, the recruiter will file you away as a potential recruit for the future,” he says, adding that as a recruiter, he was likely to be more receptive to someone he had already met, interviewed and identified as a good fit for the company. Not only does this experience help you connect with a potential employer, it also gives you an insight into what they are looking for in potential candidates and also gives you some practice in the recruitment and negotiation process. “Be gracious enough to thank them for the opportunity, even if you are declining the offer,” Chopra adds. While it is easy to network with people you know, push yourself to expand your social and professional circles.

You could also reach out to clients, says Makharia. “If you have a client-facing job, and you are good at what you do, you can perhaps move from the product side to client side. For instance, if you are in advertising, you could move to client servicing, and that’s an additional skill you are bringing to the table,” she says.  

Find a side hustle 

If you are in a sticky situation financially, you may want to seriously consider a side hustle. You could take up a freelance job or assignments to rake in that additional income, say experts. The proliferation of social media apps such as Instagram, and food–delivery apps means that more and more people have the opportunity to start and grow their homegrown businesses, using these platforms as a means to promote their work. 

Talk it over

Being handed the pink slip at work can cause a lot of stress and anxiety, but it is important not to panic. Instead, take a few days to get your bearings and review the situation. Once you have the numbers on hand, all the stakeholders need to be involved and informed about the situation. 

“Oftentimes, you enter a situation where the family panics and you feel even more dejected. Communication channels are not free-flowing during this stage, but it is critical to ensure communication is clear, and that anyone who is a dependent is made aware of the situation,” says Dhawan. Is it a cause for concern? “If we already have ample provisions in place, there is no need to panic. Can we get by with a little tightening of the belt or are dramatic lifestyle changes needed? Remember that this is probably temporary and an alternative will happen quickly,” he concludes. 

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