“You’re Fired” – Now What?

You’re not a contestant on Celebrity Apprentice, this is your life. When the words “You’re Fired” are directed to you, you may be shocked, even if you may have been expecting to hear them. What you do next can make the difference in the length of time you’re unemployed, and how you fare financially.

In your dismissal meeting, you will likely be given information about any benefits you will receive. For example, you may receive a severance package — although that isn’t guaranteed these days unless your employment contract specifies it. Fewer and fewer companies are offering so-called “golden parachutes” for departing employees, and most are reserved for top-level executives.

It may be very difficult to think with a level head at this time, however, try to cover the following seven points so you walk away with the best benefits and in the best position possible.

•    Decide on whether you want to resign, or get fired. This may seem like an odd issue, but there are circumstances when you may wish to resign instead of being fired. If you are fired, you may be eligible for unemployment compensation, benefits, and severance pay. However, you may choose to resign rather than have the stigma of getting fired on your record. (You will need to disclose that you were fired if you are asked that specific question on a job application. If you resign, you can answer “no” to the question.) In some instances, you may even be asked to resign rather than be fired. Make sure you carefully consider the pros and cons of each response before making your decision. For example, you may not be able to collect unemployment benefits if you resign.

•    Inquire about severance and outplacement assistance. Now is the time to negotiate, but don’t be pressured to sign anything if you’re not ready. Some employers won’t release your final paycheck until you sign a release, but that doesn’t mean you need to sign anything right away. Find out what’s available to you. Don’t be afraid to ask for severance.

•   Ask how reference checks will be handled. What will a prospective employer be told if they contact the company? Will your supervisor provide you with a letter of recommendation? Can he or she take calls for reference checks, or are those handled through the HR department? What information will be released to the prospective employer? (Some companies will only verify dates of employment, job title, and final salary and will not answer questions related to why you are no longer working for the company.)

•     Find out about your benefits. You may be entitled to accrued vacation, overtime, and/or sick pay. Ask about these benefits, and how they will be paid out.

•  Inquire about your eligibility for continuing your health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) law. If the company has more than 20 employees, your employer is required by law to offer health insurance coverage through COBRA to terminated employees for up to 18 months. However, you will need to pay for this coverage yourself. This gives employees and their families the option to continue group health benefits provided by your health plan for a limited period of time. (Keep in mind, however, that the cost of COBRA coverage may be higher than insurance you obtain for yourself; however, if you have a health condition, you may want to opt for COBRA coverage initially to keep your coverage in force. You can always cancel your COBRA coverage once you have new insurance in place.)

•    Be sure to get information on transferring your retirement account with the company. If you are enrolled in a 401(k), profit sharing, or other type of defined contribution retirement plan, you may be eligible for a lump sum distribution of your retirement money when you leave the company. You need to be careful about how you handle this distribution so that you don’t incur tax penalties. Retirement plan distributions have very specific requirements, so you may wish to consult a financial advisor before doing anything.

•   Find out how — and when — you will receive your final paycheck from the company. (Again, you may be required to sign some paperwork before the final check is released.)

It can be difficult to do, but try to leave on good terms. You may end up back at that company again at some point, or working with the same people in a future job. Plus, your future employer may contact the company for a reference and/or you may want a recommendation from your most recent supervisor.